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Input Vat - Are You Claiming All You Should Be?

Input Vat - Are You Claiming All You Should Be?

Date: 2014-06-27
Bad Debts: Some Good News

Bad debts plague many of our business, and are an inevitable concomitant to most trading activities. A vat vendor registered on the invoice basis will frequently be in a position where they have to declare and pay over the output vat, before they receive payment for the supply.

Relief where the debt proves to be irrecoverable:

Where a vendor has complied with the requirements of the vat act in respect of the supply, and a debt proves to be irrecoverable in part or whole, the vendor may generally claim the proportional amount of vat output that was declared and paid, as input.

A vendor must be cautious to ensure that special rules do not apply to their particular circumstances and must bear in mind that the onus of proving that the amount is in fact irrecoverable, rests with the taxpayer.

In the unlikely event that a vendor subsequently recovers an amount which was previously written off as a bad debt, the vendor is required to declare the vat output on the recovered amount.

In the same way a vendor obtains relief where no payment is received, there are also provisions regarding the repayment of input tax claimed, when the vendor does not make payment for a supply received. There are contractual terms and timeframes to be taken into account in these circumstances, and one should consult a professional to determine the rules applicable to your specific circumstances.

For a consultation on your specific vat compliance matters, contact Roberts and Chaplin on 032-586 0387 (Ballito) or 947 1010 (Umhlali).