[Question] Unknown receipts for VAT purposes

[dellatjie]

Good morning everyone,

I need assistance please.

What should be done when you receive an unknown payment in your bank account for VAT purposes.

I remember something vaguely where you should declare it as income after 6 months, but cannot seem to find anything concrete to confirm.

[Dave A]

Can I add to the question by asking how this situation should be treated for Annual Financial Statement purposes?

[Andromeda]

They are a creditor and are to be written off as income in accordance with the company policy. I am unaware of any VAT impact.

[Krono9]

Thought i give my view as a quick question does not always have a simple answer and comes down to interpretation.

I think OP may be referring to the customer overpayment provision whereby the credit becomes a deemed supply if not refunded within 4 months. S8(27) of the VAT Act. I think in this case, the definition of supply is so wide and also open for interpretation, but does include things such as involuntary supply and any "derivative" of supply, which could be triggered if you came to a point and applied company policy which would then result in income recognition in your financials for this "unknown receipt".

[Andromeda]

S8(27) I have always regarded as payment received in excess of an invoice. I assumed that OP was referring to a payment received for which there is no invoice; for more or for less.

I have a client that lets industrial equipment and they frequently receive payment from non-customers for amounts that do not agree with any sales invoices, which are all accounted for anyway; this presently exceeds R93000.00 Banks are not always willing to disclose the source.

[Krono9]

Yeah, i meant the 6 month rule OP mentions was probably relating to the idea of S8(27) but not applicable to the specific question of unknown receipts, hence the latter to deemed supply once recognised as income being the likely approach SARS would take