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Thread: Company refusal to supply VAT unregistered company

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    Company refusal to supply VAT unregistered company

    Can someone please assist me. I am in search of raw materials in order to proceed with my new business growth potential. I am not VAT registered as yet and intend and have been purchasing all my raw product cash up front. A company that I inquired about supplying me with product has informed me that they are not willing to deal with me, even on a cash up front basis, as I am not VAT registered. Is this legal? I have never heard of this before as the purchasers VAT is paid and not claimed and will have no bearing on the suppliers business whatsoever. Advice would be welcome. Thank you.

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    Site Caretaker Dave A's Avatar
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    While this question was originally posted in the Tax Forum, I think it falls more into the ambit of Section 8 of the Consumer Protection Act. In essence a supplier may not unfairly discriminate on the basis of one or more grounds of unfair discrimination contemplated in section 9 of the Constitution or Chapter 2 of the Promotion of Equality and Prevention of Unfair Discrimination Act. VAT status does not fall into the scope of unfair discrimination.

    Suppliers may discriminate as to who they will transact with on legitimate cause. A simple example to demonstrate that certain types of discrimination is reasonable would be a factory that produces a tinned food:
    • They may quite fairly limit its clients to wholesalers and retailers who will only buy their product by the case or pallet.
    • They may quite reasonably refuse to supply a consumer who knocks at their door and asks to purchase one can.
    • They might quite reasonably insist that payments are made by EFT and not via cash or credit card as they do not wish to have cash on the premises and they do not provide credit card facilities.

    In this example the single-can-purchasing consumer who wishes to buy via cash or credit card will still have access to the product, just not at the factory gate.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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    Thank you Dave,
    When I stated paying in cash, I did not mean physical cash. I meant EFT, and the EFT transaction is through before delivery or collection of the said goods. The company in question has no problem with my inquiry of supplying 25kg of each of the raw materials and send me a COD account application form, so there was no problem there. The only stipulation was that they could not supply me goods if I was not VAT registered.

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    Site Caretaker Dave A's Avatar
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    Let's look at the Constitution part of this. The relevant part of section 9 is as follows:

    (3) The state may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.

    (4) No person may unfairly discriminate directly or indirectly against anyone on one or more grounds in terms of subsection (3). National legislation must be enacted to prevent or prohibit unfair discrimination.

    (5) Discrimination on one or more of the grounds listed in subsection (3) is unfair unless it is established that the discrimination is fair.

    As you see, VAT registration status doesn't make the list and best I can tell that's the closest you get to any form of statutory protection...

    Have you asked why they insist on their clients being VAT registered?
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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    Dave thank you so much for your assistance. I managed to get hold of one of the Executives in the company and he did not understand why they could not provide me with raw materials because I was not VAT registered. He promised to look into it for me. Later today I received an email from the sales person who apologized for offending me and that now she is willing to assist me with my products. Wow, it boils down to attitude without authority.......another small hurdle overcome. Thank you again for this forum. I hope this will assist others who happen to be unfortunate enough to experience a similar situation.

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    Site Caretaker Dave A's Avatar
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    Sounds like it may have been an employee box-ticking challenge.

    Great to hear that persistence and common sense prevailed.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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