VAT and deposits

[duncan drennan]

Interesting point, Marq. Another sure way to invoke an audit is to claim a VAT refund, I hear.

Theoretically an audit should never be an issue though...

But seriously, the theory should be that there is not too much to update, but inevitably there is much flapping and running around when SARS lets you know they will be visiting.

Are there any businesses out there who's house is actually in order (only minor tidying before the guests arrive)? My (second hand) exprience is that there are not many - so why is that?

[Dave A]

Personally, I'm pretty confident, but I have to suffer an annual audit anyway from my auditors who are pretty thorough. It's the lost time and disruption that would bug me and I don't see the sense of invoking a mandatory audit when good planning could avoid it.

As for most businesses not having their records in order - There's a topic for a new thread if ever I saw one.

[Marq]

No refunds are fine (well I hope so cause I do them on a regular basis) as long as your paperwork is up to date and there is no outstanding stuff ) they repay fairly sharply - As long as you don't do losses/claims on an ongoing basis - pay some in and claim some, you're ok. How you manage this depend on your accounting and timing abilities.

Sars assumes and gives leeway for losses from time to time but at some stage they will marry the whole lot up and say "how is this business funding itself". So if you continue to claim (assume business trading normal ) you are making a loss - check out income tax side - whats being declared. I believe the track record is set at 5 years. If you make losses beyond this, the levels of tolerance are reached and the audit kicks in to check out how your operation is managing to make ends meet.

Duncan - audits are always a potential and the other side of life is that the paperwork is never properly in place....with me it's a case of a cobbler never mending his own shoes...with most business orientated guys, I think it's a game of cat and mouse. Its that we enjoy the chase stuff that somehow doesn't involve boring paperwork until later and then it's this oh oh reaction.

So...in theory...haha..this paperwork isn't a problem - but juggling the books (legally of course) to make sure we make a buck......well there's the rub.

Be Consistant, be Careful, be Creative - three C's for your partner, the sars (small letters - no caps)...thats the way I see it..your small partner...whether you like it or not - he is there taking his cut for the good of the Country and building a better life for all....let him in now and again but keep him at bay treat him as hostile and a threat at all times.

[Dave A]

Maybe SARS has got used to you.

There was a time if I bought a commercial vehicle, I qualified for a refund. I'd get a call from SARS asking me what the "unusual" capital input tax claim was for, and to fax through the tax invoice.

As I said earlier, when it was announced that SARS would be auditing more regularly, I heard that one of the triggers was going to be when there was a refund claim. But then, the theory was that they were going to do a VAT audit on everyone on a five year cycle, but there's no sign that it's happening.