Deregistering as a VAT vendor can be challenging, according to the Office of the Tax Ombud (Oto).
This comes after the office received a complaint from a taxpayer against the South African Revenue Service (Sars), where it delayed deregistering the taxpayer’s VAT (Value added Tax) profile for over a year.
“A taxpayer approached the Oto after submitting numerous requests for deregistration of a VAT number and experiencing substantial delays in having the request finalised,” Oto said.
In its findings, Oto said it investigated the complaint and discovered that although a request for VAT deregistration was submitted to Sars on August 6, 2020, the taxpayer had not provided all the relevant documentation, as indicated on the Sars website, to substantiate the request.
“Although the application did not meet the requirements, Sars failed to guide the taxpayer about how to have the matter resolved correctly. The taxpayer submitted a second VAT deregistration request on February 9, 2021, which was again incomplete.
“Sars did, however, request some additional information on February 10, 2021, which the taxpayer submitted on February 11, 2021. Unbeknown to the taxpayer, certain information was still missing, but Sars did not mention this and again left the taxpayer without further guidance.”
According to Oto, a third incomplete application for VAT deregistration was submitted on July 19, 2021, which Sars declined on July 20, 2021. Eventually, the application containing all relevant information was submitted by the taxpayer to Sars on March 22, 2022.
“The taxpayer received no feedback from Sars and accordingly complained to the Sars Complaints Management Office (CMO) on May 5, 2022.
“The complaint covered the deregistration of both the VAT and income tax numbers. Sars finalised the CMO complaint on May 21, 2022. Sars deregistered only the income tax number on May 18, 2022, but they did not deregister VAT. On June 15, 2023, the taxpayer lodged a complaint with the Oto for deregistration of VAT,” it said.
Oto recommended that Sars finalise the request to deregister the VAT account, as all supporting documentation had been submitted.
“The deregistration of VAT was finalised on July 14, 2023. A Notice of Cancellation of Registration was sent to the vendor.”
Oto said that to avoid such situations, taxpayers must familiarise themselves with the requirements for requests they want to send to Sars.
“They should know what documents should be submitted with the requests, as well as the time frames in which Sars deals with the requests. At the same time, it is important for Sars to communicate with taxpayers about shortcomings in their requests so that taxpayers become aware of the problem and can rectify it,” Oto said.