# Regulatory Compliance Category > Tax Forum > [Question] VAT201 CORRECTIONS

## Hazel1971

I have a client whose VAT201 Return was rejected by SARS.  They are newly registered for VAT and had bought a vehicle in the first period which resulted in a refund being due from SARS.  Subsequently, and without advising me, they have gone ahead and paid SARS the amount that SARS insists they owe.  The VAT period has already been closed on Pastel (it was 2013/08) and now I'm not sure what I should do - with SARS or Pastel!

My client does their own e-filing and they have not submitted a corrected return because they don't think it is necessary - I disagree, who is right?!!

How am I going to make sure my VAT Control Account in Pastel balances?  The tax period has already been closed.  The VAT was introduced via a supplier invoice for the full amount of the vehicle cost.

My client has just called and told me that SARS have instructed them to submit the 2014/03 VAT Return and include the vehicle invoice from August 2013.  Does this mean I should pass a credit note for the August invoice and re-enter the invoice in the current period?

I'd really appreciate any insight here!

Thanks.

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## Justloadit

If the company does not deal in vehicle sales, then if I am not mistaken, they can not claim VAT on a vehicle purchase. There are a few exceptions, and some of my learned friends on this forum will comment further on this.

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Hazel1971 (28-Feb-14)

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## Marq

I dont know about the pastel side, but I can tell you:-

If you make any adjustments to the return and numbers for that period, then make sure it is done in that same sars period.

I made corrections and put adjustments (on their helpdesk recommendation) in the next period and have been explaining ever since. 
On the one side I have an under payment which has now attracted penalties and interest for short payment and the next period shows an over payment and unallocated amounts. Every time I have attempted a correction (under their guidance) the story gets worse. 

Now I have had to write to please explain and beg forgiveness and tell them how sorry I am that I stuffed up and its all my fault but its just an admin error that all squares up if you take the two months together.

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Hazel1971 (28-Feb-14)

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## Dave A

I'm with Marq. If the payments get behind the returns, SARS isn't going to hesitate to burn your client for penalties and interest. 

If the invoice is correct, the input VAT is claimable, and the period's VAT201 return was correctly submitted, you probably should contest the rejection.

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Hazel1971 (28-Feb-14)

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## Justloadit

From my experience and VAT and SARS, that once a VAT return has been filed, and mistakes are encountered in this return, I would strongly suggest, that all correcting entries be made in the new yet un-filed VAT period, even if you have overpaid/underpaid, the adjustment is made in the new VAT period. Ensure that you make detailed notes of what was done, and file it in your local file in the VAT period that you made the corrections for, in case there is an inquiry at a later date.

What is important, is that the year end figures balance, that is turn over, input VAT, Output VAT.

NEVER fiddle with filed VAT returns, the please explain and amount of time and effort is just not worth the aggravation, of making the correction in the already filed VAT period, versus the un-filed VAT period. In the case that SARS does a query at a latter stage, you then present the corrections that was made to rectify the error on the VAT period that the correction took place. Far easier for them to accept.

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Hazel1971 (28-Feb-14)

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## Marq

> What is important, is that the year end figures balance, that is turn over, input VAT, Output VAT.


Not true in my recent experience as described above. The taxman looks at each period separately and does not have a year end figure for vat purposes.

Now for normal tax he will look at the year scenario where the tax system will look at your vat output tax paid - calculate a potential turnover and compare it to your declared turnover. This is a reconciliation that you should do every year to make sure you have your ducks in a row.

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## Dave A

From the book-keeping side -



> My client has just called and told me that SARS have instructed them to submit the 2014/03 VAT Return and include the vehicle invoice from August 2013.  Does this mean I should pass a credit note for the August invoice and re-enter the invoice in the current period?


 :Hmmm:  If the client "overpaid" the VAT liability account, that overpayment balance should still be in the VAT account and merrily carrying through to date - and is a fair reflection of the client's VAT liability. Therefor no additional entries required.

If you claim the input VAT in the 2014/03 return, and pay the amount due per the return, life returns to normal.

(Sorry, I know with Pastel the VAT liability accounts are set up differently to QuickBooks. So as I don't use Pastel, I can't give the default account numbers / account names for where that "overpayment" should be reflecting.)

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Hazel1971 (28-Feb-14)

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## Justloadit

> Not true in my recent experience as described above. The taxman looks at each period separately and does not have a year end figure for vat purposes.


I must admit my experience was a couple of years ago, so things may have changed. But SARS had the audited balance sheets in front of them, and had compared the year figures to the figures that were sent to SARS via the VAT forms, and were simply doing a spot check.

Anyway if you do as I suggested, each period would balance.




> Now for normal tax he will look at the year scenario where the tax system will look at your vat output tax paid - calculate a potential turnover and compare it to your declared turnover. This is a reconciliation that you should do every year to make sure you have your ducks in a row.


This may a general rule to pick up supposedly variances in same type of business scenario, but is no yard stick they use, its simply a list which they use to do spot checking on. In my case, my input/output VAT is erratic, simply because of manufacturing times can take up to 12 weeks to complete from the time of purchase to the time of invoicing, and to add to the mix, quite a number of orders are exported directly to clients, meaning, no Output VAT.

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Hazel1971 (28-Feb-14)

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## CLIVE-TRIANGLE

It is now system driven. If the turnover in the ITR14 does not approximate that submitted via VAT201's, they simply issue an SD14 supplementary declaration as part of your ITR14 and require you to reconcile it within R100.

The request for correction thingy iro VAT201's has also changed. You can increase the turnover on the corrected one, but you cannot increase any of the input credits. Sneaky huh?

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Hazel1971 (28-Feb-14)

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## Hazel1971

Thanks Dave A - I did advise my client to contest but apparently they didn't think it was worth it.  Some people's kids eh?

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## Hazel1971

Thanks for the comments everyone.  I spoke to SARS via my client yesterday as they were in a meeting at SARS icw this and several other issues they're having (that thankfully have nothing to do with me).  I asked whether they should submit a request for a correction of the VAT return 2013/08 - she answered 'no'.  So I asked if I should pass credit notes for the invoice processed in August 2013 and re-enter the invoices in the current VAT period and she said 'no'.  So I asked what it was I should do and she said 'adjust the next VAT return'; so I asked whether she meant I should do a manual adjustment to the next return and she answered 'no'.
So I've learned two things, SARS (in my humble opinion) doesn't know what they're talking about and her favourite word is 'no'.

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CLIVE-TRIANGLE (28-Feb-14)

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## CLIVE-TRIANGLE

I guess she meant cook it, which is what I would have done anyway.

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## Marq

Speak of the devil.........

I just received two VAT217's (notice of assessment)  for the two periods that sars stuffed up in 2011. 
One has big amount due the other one big amount they owe me.
Net effect per the two forms from two periods is R589 - per efiling account maintenance section, I owe R91.67. Go figure.

This is how they reversed penalties and interest from the one vat return period. It should have been a simple one line journal entry that has turned into a 10 page document.

I have no idea where the R91 comes from, (or any of their numbers - suspect interest on interest) neither does the guy on the help desk.

Net result - Paid the R91 and he assures me all has gone away. I asked about the two assessment forms I just received - ignore that he says just pay the net amount.
A simple problem of nearly three years in the making with huge lost man hours has ended.
It started because of a mis-allocation of adjustments and bad advise from them and they still screwed me out of R91.

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