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VAT INVOICE REQUIREMENTS & MISTAKES

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Article by listed accountant Nkosinathi Mhlope

From my past dealings with clients and as I continue dealing with them, I observe time and time again that there are things that are taken for granted like how a Vat Tax invoice should be. The South African Revenue Services is very strict when it comes to refunds, and even when there are no refunds due and a client has to pay VAT if SARS auditors pick up that the VAT201 are erratic or not consistent that may attract an audit. Most of the time that is when SARS rejects a lot of the so called VAT tax invoices for non - compliance with the SARS requirements. This tends to cost clients a lot of money because one finds that even us Tax practitioners neglect this when doing Vat input for clients. From my observation SARS can go at length to punish would be non-compliant companies by issuing a non-compliant penalty of up to 200%. That means for example if one claimed a Vat input of R10,000, instead of SARS refunding that Vat input or offsetting it against the Vat output SARS may penalise you up to R20,000.

The essence of this article is ensuring that as a client or potential client, one understands that certain things that are overlooked may at the end prove very costly to the business. This brings unnecessary stress and cash flow problems

The tax invoices you issue and receive must have the following details for SARS to consider them valid:

•    The word “Invoice”;

•    The name, address and VAT number of the supplier;

•    The name, address and VAT number of the buyer;

•    A serial number of the invoice;

•    The date;

•    A description and the mass or quantity of the goods bought;

•    The amount paid for the goods bought; and

•    The amount for the supply, the VAT and the total, or a statement that VAT is included in the price and the rate at which it was charged (i.e. either 0% if zero-rated, or 14% if standard-rated).


It is important to note that when it comes to the amount paid for the goods or the Vat amount charged the indication of the currency type must be shown - – i.e. Rand, Zimbabwean Dollar or Pound. Did you know that it’s a pre-requisite for the whole tax invoice to be issued in one of our official languages, and that it must be in Rand? This is because fraud is l always inevitable where one may even purchase something for example in Botswana and the invoice is made in Botswana Pula and come to South Africa to claim the Vat. This maybe either out of ignorance or deliberately. But then when it comes to the law or SARS one cannot not plead ignorance after being heavily penalised.

So next time you capture a Vat Tax invoice be it an Output or Input invoice ensure that you check it to make sure it agrees with the requirements of SARS. Please note that you can claim input tax for any amount less than R5 000, with an abbreviated, or shortened tax invoice. This means the name, address and VAT number of the buyer doesn’t have to appear on the tax invoice. Essentially, it can be made out as “cash”. However as stated above that invoice must still be in one of the eleven official languages and must be in South African rand value.

Hope this article helps you to be prudent when it comes to Vat issues


Kindly contact the author for all your Accounting and Tax needs. We also do professional business plans that have never been rejected by potential funders. We also do site visits in Gauteng within a radius of 50km to clients at no extra cost.

Call Nkosinathi Mhlophe

011 068 2290

071 878 9300

Or contact us via these platforms

nathi@kusasaconsulting.co.za

www.kusasaconsulting.co.za