[Question] Mandetory VAT Registration - In Trouble

[Michael]

Hi,

Im really hoping someone can help:

I own a small business that crossed over the R300 000 vat limit about a year ago. I have only recently woken up & realized that i was supposed to register for vat. sars has told me that i need to pay VAT in on all my sales since i went over the limit(even though i didn't charge VAT). this, combined with penalty & interest is a lot of money, enough to close me down...

one way out that i hoped would work, was to credit note all my sales and make new invoices out to my customers, with vat added on. I have spoken to my customers and most are happy doing this(as they are vat registered and will be able to claim it back) but i dont seem to be getting a solid answer from sars(when i call them they sometimes say yes, sometimes say no and so far nobody senior has gotten back to me) so i dont know if its possible to do it like this.

i read through the vat act(the part regarding invoices,credit notes & debit notes) and from what i can see i should be able to either credit note it and make new invoices, or make out a debit note?

any advice?

[Dave A]

Ouch!

I could easily be misunderstanding the situation, but what I see is:

What you are proposing only really helps your clients, unless they are now going to pay you extra for the VAT because it is now claimable as an input in their hands. In that case what you propose could be worth the effort if the amounts involved per client are big enough. There could still be issues around period...

What I see missing in your post is the issue of input tax. Have you (or SARS) calculated the input tax you can claim back?

[Michael]

Ouch!

I could easily be misunderstanding the situation, but what I see is:

What you are proposing only really helps your clients, unless they are now going to pay you extra for the VAT because it is now claimable as an input in their hands. In that case what you propose could be worth the effort if the amounts involved per client are big enough. There could still be issues around period...

What I see missing in your post is the issue of input tax. Have you (or SARS) calculated the input tax you can claim back?

:-) Thanks for the reply. Yip i would want to charge the customer extra(for example if i invoiced them R 10 000(no vat) before, i would want to give them a credit note for R10 000(no vat) and a new invoice for R11 400(incl vat). So the customer would owe me R1400, but would be able to claim that back. Yes the amounts per client is pretty big(100 000k)

Regarding the input vat: Almost all the the work is labour so my input vat is next to zero(its basically just from phone bills)

[Dave A]

In that case:

This is Africa - it's easier to ask for forgiveness than to ask for permission
Especially if SARS isn't taking a stand on the issue up front.

You're lucky you've got co-operative clients.

I hope we're talking about this financial year just past. Re-opening old financial years when they're already filed is such a PITA.

[Sieg]

VAT

Also bear in mind [for the argument with SARS!] that the VAT threshold has been increased to R1 million as from 01st March 2009 by virtue of the amendment to Section 23(1)(a) of the Value Added-Tax Act 89 of 1991.

Sieg