How to Do VAT Audit

By Trev Gami •  Updated: 10/15/23 •  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.      

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

How To Add VAT to A Price In South Africa

How To Add VAT to A Price In South Africa

Today, we are diving deeper into the mathematical side of VAT, including how to add and subtract VAT from amounts

Can a South African Sole Proprietor Register for VAT?

Can a South African Sole Proprietor Register for VAT?

This comprehensive guide will address this question and provide insights into VAT registration for sole proprietors

How Long Does It Take To Deregister For VAT?

How Long Does It Take To Deregister For VAT?

How Long Does It Take To Deregister For VAT? Today, we are looking at this side of the process in greater detail.

How to File a VAT Return

How to File a VAT Return

If you are a registered vendor and want to learn how to file a VAT return, we have you covered here. 

How To Apply For A VAT Number In South Africa

How To Apply For A VAT Number In South Africa

If you wish to become VAT-registered with SARS as a South African business, you will need to apply for a VAT number.

How Is VAT Calculated on Imported Goods In South Africa?

How Is VAT Calculated on Imported Goods In South Africa?

How Is VAT Calculated on Imported Goods In South Africa? Read on to learn how VAT is calculated on imported goods.

How To Calculate A Price Excluding VAT

How To Calculate A Price Excluding VAT

There will be times when you want to know what the price excluding VAT was on an item, either as part of your own price calculations as a business

How To Submit A Zero VAT Return

How To Submit A Zero VAT Return

Today we will be looking at what to do in these cases, as well as how businesses that make zero-VAT-rated goods should handle their VAT return.

Can You Claim VAT On Accommodation In South Africa

Can You Claim VAT On Accommodation In South Africa

This comprehensive guide will delve into the VAT nuances related to accommodations, such as whether VAT applies to stays surpassing 28 days

How is VAT Charged on Second-Hand Vehicles

How is VAT Charged on Second-Hand Vehicles

This detailed guide will delve into various aspects concerning Value Added Tax on second-hand vehicles in South Africa.

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

What is VAT Exclusive?

What is VAT Exclusive?

Understanding VAT exclusive is like having a secret code to unlock the true cost of goods and services.

What is Deferred VAT?

What is Deferred VAT?

Deferred VAT in South Africa pertains to the provision extended to Customs clients who are duly registered or licensed

What is the Difference Between TAX and VAT?

What is the Difference Between TAX and VAT?

There are two main characters in the tax story that individuals and businesses meet quite often - income tax and VAT.

How Much Must You Earn to Pay VAT in South Africa?

How Much Must You Earn to Pay VAT in South Africa?

This guide explores the income thresholds for individuals and businesses that trigger VAT obligations