In October 2016 various accounting and tax bodies asked their members to participate in a short survey to indicate whether their clients experienced delays in receiving Vat refunds from SARS.
The accounting and tax controlling bodies wanted to establish the scope of the problem, as they received a drastic increase in complains from tax practitioners about slow Vat refunds from SARS. Some taxpayers went so far as to accuse government of using their refunds as a cheap form of funding. The frustration is understandable if you take into account many taxpayers pay their Vat, PAYE and taxes on time for years and simply expect the same treatment from SARS.
SARS response was the standard. “They increased their security to protect themselves and taxpayers against fraud”
So here are some tips to ensure you get your refund quicker.
Vat refund tip 1
When you know there is a claim, submit your Vat return as soon as possible after month end. You must submit your return by the latest on the 25th day of the month following the end of the month your vat period falls in. When there is a claim, submit it on the 1st, 2nd or 3rd.
Vat refund tip 2
Ensure all your tax affairs are up to date and that no money is owed to SARS. The easiest way to check whether your affairs are up to date is to apply for a tax clearance certificate or to check the tax status on SARS Efiling. If it is not up to date the tax clearance will be declined. Under your tax compliant status non-compliant items will appear in red. If that is the case don’t be surprised if you experience delays.
Vat refund tip 3
Ensure bank details are correct at SARS and that the status is valid. You can check the status on SARS Efiling. A bank account should be linked to each one of your tax types PAYE/Vat/Income tax etc. If no bank account is linked to your Vat expect a delay. As an additional safety measure phone SARS’s contact centre and ask whether there is anything that may block your Vat refund. They may see something you have missed. However don’t rely on them without doing your own checking on SARS efiling. They are just human and may miss something as well.
Vat refund tip 4
Before you submit your return, ensure you have supporting documents available to show how you arrived at your output and input figures. Scan the five to ten biggest input invoices. If there are any big capital purchases scan the invoices as well. When you receive a letter from SARS informing you they are reviewing your return and need supporting documents, submit the supporting documents and workings immediately.
Vat refund tip 5
When you submit documents to SARS make it easy for the auditor. Include a letter explaining anything that may be ambigious or need further explaining. Include your contact details. Give each scanned document a proper name so the auditor can match it to your Vat workings. If you can cross reference it even better. SARS auditors are busy too and it is easier to decline your claim than to figure out how you arrived at your figures.
Vat refund tip 6
This goes with tip 3, Ensure there are no mismatches of data at SARS. Different addresses, contact numbers, and especially bank details. In the past when taxpayers applied for different types of taxes they may have used a different address at each application. A different address may exist for Vat, PAYE and Income tax. SARS does not like that. Use the merge function on SARS Efiling to rectify it before you submit your Vat claim.
Vat refund tip 7
Sometimes it is better to postpone the claiming of input tax. You have five years in which to claim an invoice for input Vat. If there is a big refund in this period, you carry a few supplier invoices over to the next period, pay in a small amount and claim the input in the next period reducing that period’s VAT liability. You in effect refund yourself – just later than you should. This is sometimes the better option especially if everything is not 100% in order and it will take you time to get it in order.
Vat refund tip 8
If you have tried everything and all else fails you have the option to approach the tax ombudsman. SARS are sometimes in the wrong and more than seventy percent of taxpayers win their case against SARS when approaching the tax ombudsman. Just ensure you have followed the correct channels before approaching that office.
What’s your experience with Vat refunds. Looking forward to your post.