How to Do VAT Audit

By Trev Gami •  Updated: 01/23/24 •  6 min read

All enterprises registered for VAT are expected to be compliant and pay tax to the South Africa Revenue Service (SARS) as expected. However, some unscrupulous businesses may fail to honor their tax obligations and declare incorrect tax positions to SARS. This can compromise the revenue collected by the government. To prevent such a scenario, SARS randomly selects taxpayers for audit

- ADVERTISEMENT -
.  This article explains everything you want to know about VAT audits.  

What Is the VAT Audit Process?

A VAT audit refers to the examination and verification of the accounting and financial records of a company to ensure that vendors are contributing regularly and honestly toward their tax obligations. However, it is something undesirable to business, and it often causes unnecessary panic, but this can be avoided. 

If your records are accurate and updated regularly, a VAT audit is not scary. When SARS officials audit your business, they will check the following items:

When your books are in order, there is nothing much to be afraid of. If you are selected for an audit, you can enlist the services of a tax professional to handle the situation on your behalf. 

How Do I Prepare for a VAT Audit?

Once you get a formal Notification of Audit, it means you have to prepare for it. A taxpayer is usually requested to submit supporting documents to SARS within a certain timeframe, so you should do so without failure. The scope of the audit determines the relevant material required, so you must get full details first. Alternatively, you can make arrangements with SARS so they can undertake the audit at a convenient time.

In some instances, SARS may obtain the required materials from a third party. You need to assist to ensure that the documents are correct and they are in electronic format. If you are registered for eFiling, you need to scan the material and upload it to your profile so that it can be accessed easily. When you send the documents to SARS via eFiling, make sure you click submit so they are delivered. 

The original formal notification letter from SARS must always accompany all the documents you submit via eFiling or hand delivered at the branch. This letter has a specific bar-coded reference that links your tax records with the documents provided. When uploading the documents via eFiling, you must use the correct format. The accepted file type can be docx, doc, pdf, xls, gif, jpg, or xlsx. The maximum size of each document must be 5 MB and 20 documents can be uploaded.      

- ADVERTISEMENT -

Vendors selected for an audit can also liaise with SARS officials to collect the materials stated, or they can deliver physically if they cannot send them via eFiling. A specific audit is allocated, so you must stay in close contact with them. Contact the SARS official you would be dealing with if you require further assistance.

What to Expect in a VAT Audit?

When you are selected for an audit, you will receive a formal notification and be allocated a specific auditor. You should expect the following things from a VAT audit:

If SARS believes that progress reports may impact the outcome of the audit, they may not be produced. Naturally, an audit is more intrusive than verification of the taxpayer’s accounts. Therefore, you should expect to be asked more things than what you anticipate. 

Depending on the complexity of the audit, you should expect it to be completed between 30 working days and 12 months. In some instances, it can even take longer. To speed up the process, you must be willing to cooperate and know that SARS can request additional material throughout the audit process. 

If you can’t produce the material, SARS will use the information obtained from third parties, which can compromise the outcome. It is important to respond to all requests by SARS officials. You can face heavy penalties if you’re uncooperative. 

How Long Does a SARS VAT Audit Take?

A SARS VAT audit can take 30 business days up to 12 months. The process can even be longer depending on the volume of transactions being handled, the taxpayer’s cooperation, and the complexity of the issue at hand. If SARS requires additional material, you will be asked to provide it, and this can affect the assessment time. You should work closely with your specific auditor to make the process seamless.  

What Is the Purpose of VAT Audit?

A VAT audit is specifically meant to assess the taxpayer’s invoice flows and supply of taxable goods and services if they are compliant. It also involves a comprehensive assessment of your business accounts to establish if they are done above board. In other words, an audit aims to ensure that all taxable supplies are properly accounted for.

SARS often selects vendors to conduct VAT audits to ensure they comply with the law. When you’re selected, you need to work closely with the auditor to get the best outcome. If you don’t want to cooperate, the auditor involved can obtain details from a third party, which can compromise the outcome of the audit.    

- ADVERTISEMENT -

Keep Reading

What Is Reverse VAT in South Africa?

What Is Reverse VAT in South Africa?

However, as a newly-introduced concept, there is a lot of uncertainty surrounding it. Today we hope to clear up some of that confusion.

How Does VAT Work with Mortgage Bonds?

How Does VAT Work with Mortgage Bonds?

This guide provides insights into how VAT interacts with mortgage bonds in the South African context.

What Kind Of Tax Is VAT?

What Kind Of Tax Is VAT?

VAT is payable to the Revenue Service, or SARS. Businesses that meet specific turnover thresholds are required to register for VAT with SARS

Are Salaries Exempt from VAT?

Are Salaries Exempt from VAT?

This piece seeks to elucidate how Salaries are treated under VAT in South Africa, differentiate between zero-rated and exempt supplies

VAT201 – Vendor Declaration

VAT201 – Vendor Declaration

VAT201 – Vendor Declaration. Read on to learn everything you want to know about the VAT201 vendor declaration.  

How To Apply For VAT Exemption

How To Apply For VAT Exemption

There is also a wider category of goods and services that do not generate VAT on the end user. Today we look at these in more detail.

How Does SARS Calculate Interest on VAT?

How Does SARS Calculate Interest on VAT?

This comprehensive guide will delve into how SARS calculates interest on VAT, including the interest rate

How Much Percentage Is VAT In South Africa?

How Much Percentage Is VAT In South Africa?

Today we will delve into the VAT rate, what items are VAT-free, how to calculate the 15% VAT in South Africa

How To Calculate Customs VAT And Duties

How To Calculate Customs VAT And Duties

We are looking into VAT and duty more closely, with some important information you should be aware of if you are importing and exporting goods

What Differentiates Customs Duty From VAT?

What Differentiates Customs Duty From VAT?

Customs Duty is a tax that the South African government charges on imported goods. VAT is imports to local transactions.

How Does VAT Work with Business in South Africa?

How Does VAT Work with Business in South Africa?

Through this guide, we delve into the mechanics of VAT for businesses, shedding light on vital aspects such as deductions

What is a VAT Reverse Charge in South Africa?

What is a VAT Reverse Charge in South Africa?

Specifically, when it comes to valuable metals, the responsibility for accounting and paying VAT does a bit of a switcheroo.

How Much is the VAT Rate in South Africa?

How Much is the VAT Rate in South Africa?

This guide offers comprehensive insights into the VAT rate, the calculation process, exempt items, and the minimum income threshold for tax payment

Can You Claim VAT on Car Insurance?

Can You Claim VAT on Car Insurance?

This detailed manual will cover the essential components of VAT concerning automobile insurance in South Africa

What Is The Difference Between Exempt And Zero-Rated for VAT?

What Is The Difference Between Exempt And Zero-Rated for VAT?

It is critically important to understand what each of these two distinctly separate categories means, and how it will impact your business if you operate with either.