SARS threatens to disallow your input tax claims
The problem is, if you claim input tax for bad debts (in block 17 of the VAT return), SARS is threatening to disallow your deductions,
unless you can prove you handed the debt over for collection. Or some other type of legal follow-up has taken place to prove you tried to collect the debt.
This is an illegal action on the part of SARS!
And the reason it’s illegal is because Section 22(1) of the VAT Act doesn’t say, you must be able to prove the debt has been handed over for collection.
The Law just says if an amount becomes irrecoverable, and you’ve already paid over the VAT, you claim the input tax.
Remember this the next time you make an input tax claim for bad debts, and the SARS auditors ask for proof of collection attempts.
Refer them to Section 22(1) of the Act.
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