I'm proud to pay taxes
I could be just as proud for half the money
Arthur Godfrey
Many businesses manage their VAT cashflow by altering invoice dates or misrepresenting their output & input taxes. This is illegal and SARS is likely to impose heavy penalties - up to 200% - if discovered.
There are legitimate ways to manage your VAT cashflow...
Change your basis of paying VAT from an Invoice basis to a Payment basis - Individuals and partnerships comprising of natural persons with an annual turnover of less than R2.5 million, qualify to pay VAT only when payment is received from debtors.
Change your VAT frequency - Vendors with an annual turnover of less than R1.5 million qualify to submit their VAT returns every four months.
Write off Bad Debts quickly - That does not mean stop pursuing them, merely that once the possibility of collecting is unlikely, write them off resulting bad debt relief in terms of the VAT Act.
Submit your VAT returns via e-filing - VAT payments are only due on the last business day of the month as opposed to the 25th day.
Manage your invoicing up front - The issue of an invoice triggers a VAT payment. If you issue invoices generally at the end of a month, consider postponing the issue of invoices to the beginning of the following month, thereby moving the obligation to pay VAT into the next tax period.
Get your customers to prepay - request your customers to make upfront payments equal to the VAT on the goods or services supplied.
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