This is an area of tax, particularly within the realm of VAT, that is inexplicable when it comes to SARS’ treatment thereof, the consequences of which can be extremely bothersome for many taxpayers. For SARS, it does not seem to be enough for taxpayers to be fully compliant in order for them to receive their duly entitled refunds. Taxpayers need to go over and above SARS’ requirements and any minor error can be the reason for the refusal of such refund.
One such example of this is an ongoing tax court case with which have been assisting one of our clients. In this matter, SARS raised an assessment in which the input VAT of our client was disallowed, accordingly increasing our client’s VAT liability. SARS rejected our objection thereto on the basis that one of the supporting documents, being the Bill of Entry, reflected incorrect importer’s details. According to SARS, this error meant that our client did not satisfy its burden of proof. The bizarre thing about this, however, is that the Bill of Entry is merely a customs record-keeping document and not proof of payment or an invoice. Furthermore, this document can be corrected fairly easily.
Thus, SARS’ attention is either terribly misdirected, or this is yet another reason to delay taxpayers’ VAT refunds. In our experience, we have come to understand that there are endless reasons that are given for the delay of VAT refunds and we have, as a result, developed an effective strategy in dealing with these delays, particularly within the realm of exports and imports.