Case Study – Vat Registration Rejection – Non Compliance

We had a client that wanted to register for VAT voluntarily. They had more than the minimum requirements to be able to qualify for a VAT number. We submitted their VAT application to SARS and after it went under review, we waited the 21 working days for SARS to review this application. After the 21 working days passed, we received a notification that the VAT application had been rejected due to the non-compliance of the company. The client had to submit their outstanding returns in order to appear compliant with SARS. Once this was done, we had to resubmit the application from scratch since it was rejected. We had another client that wanted to register one of his companies for VAT, however, he was deemed non-compliant in his personal capacity. The client is running three companies, and never submitted the returns in his personal capacity. The company was projected to trade over a million in that year, making this a mandatory registration. The fact that he was non-compliant in his personal capacity caused a huge delay in the registration and raised some concerns for SARS about allocating a VAT number.

Since the new VAT registration review process has been implemented, SARS has been very strict with these requirements. The company may have all supporting documents, but tax compliance plays a big role in new registrations, especially since there was a lot of fraud regarding tax returns, where companies claim VAT where they should not, or simply do not submit their returns. “Why would SARS allocate a VAT number to a company who does not submit their normal returns?” – a SARS agent I spoke to regarding the rejected applications. It is important to remain compliant in your personal capacity and in your company to ensure that the company is in good standing in terms of legal obligations and does not face any penalties, etc. This will ensure that your future registrations go smoothly.