Quote Originally Posted by Dave A View Post
You know, SARS still has the voluntary disclosure program running - no penalties and no interest if you come clean (and pay up the actual tax owed to SARS). Approaching SARS might well be the way to go for a fairly clean exit from a messy situation.
Excellent advice and almost certainly the way to go. It's going to look suspicious ("I didn't know that I couldn't use someone else's VAT number ... honest!") but I don't see any other viable alternative. With a bit of luck, penalties may be waived or (at the very least) reduced (especially if the VAT portion is relatively negligible).

Retaining the client may be the trickier challenge. I guess you have to choose between coming clean and trying to build a relationship on trust (and risk losing the client) or keeping quiet about the whole thing and settling for a relationship that will always be on thin ice (and hoping they never find out).