Hi Guys,

I have a small business that tenders for contracts with the Western Cape Government and in particular the Department of Health. We supply the hospitals with various food items which we procure from various wholesalers and retailers. Our contracts with the Department of Health are once off contracts as well as term contracts. We registered for VAT in November 2019. We informed the hospitals that we had been registered for VAT and that we would be charging VAT on all our invoices from the date of registration. This is according to Section 67 of the VAT Act which clearly states that VAT becomes payable by the clients of vendors from the date the vendor becomes registered for VAT irrespective of when the order or contract was awarded. The Department of Health is refusing to pay VAT on our Tax invoices claiming that our contracts were awarded prior to us being registered for VAT and that their internal policies and processes does not allow them to change the value of a contract once it has been awarded. We have raised the matter with various SARS officials who simply does not want to assist us in this matter.

Could anyone please share some advice as we are not able to complete the output value on our VAT201 forms correctly due to our invoiced totals and our income totals don't balance (because of the 15% VAT not being paid).