The opportunity for interest on a VAT refund
MANY SOUTH African businesses who are on the receiving end of delayed VAT refunds from SARS may be unaware that there are instances where they are entitled to interest on overdue refunds.
SARS understandably takes its time to thoroughly vet VAT claims to prevent fraud, but it does not mean that South African businesses must sit back and patiently await their refunds, with no rights, in cases of significant delays.
The court case of Top Watch (Pty) Ltd v Commissioner for SARS highlighted that SARS’ authority to delay a refund is limited to the refund itself. The case clarified that unrelated audits in respect of other periods / tax types should not be used as a reason to withhold a VAT refund.
Both the VAT Act and the Tax Administration Act (TAA) provide protection for taxpayers facing prolonged delays. In some cases, it even allows for interest on these overdue refunds.
Tax Ombud confirms that interest is due
In a recent case, the Office of the Tax Ombud (OTO), which deals with taxpayers’ complaints against SARS, secured thousands of rands in interest to a business waiting on a VAT refund…
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