When you come to complete your company VAT return, do you wish you had someone to answer all your questions?  Well I plan to share some VAT tips with you this week.  Here are 2 tips, by using these tips you will avoid being caught out during a VAT audit.

Bad Debits

• Claim back the VAT paid on debts

Claim back the VAT paid on all your debts that have become bad or irrecoverable!

On large contracts the 14% paid over to SARS may represent a substantial claim.  Even on smaller debts that that have been classified as irrecoverable, the cumulative amount of adjusting input tax claimable may be surprisingly large.

If the debt is already given up as bad debt, there’s no point in compounding the damage to your company by forgetting to claim the VAT back.

• Write off the debt before claiming

You must have accurately written off the debt before you can claim the input VAT.

Don’t claim any adjusting input tax for provisional bad debts, SARS will disallow this.

• Don’t include interest in your calculation

When working out the input tax on your bad debts, do your calculations only on the original invoice amount not honoured by the customer.  Don’t calculate the VAT on any interest you may have charged, as there is no input or output tax on interest.

Entertainment

Input tax calculated on business travel is a major issue.  Do you know what you can and can’t claim? Can you claim on meals?  Are entertainment claims always deductible?

• No free meals for clients

You can claim the VAT relating to your employee’s meals and not the meals of any of your clients.

Carrie-Anne Diniz

CentsAccountability

Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.

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