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Cape Town - A Fin24 user says the South African Revenue Service (SARS) is sitting on the working capital of his business while it delays paying out funds he overpaid to comply with rules.
“SARS took my working capital, changed the Vat rules and fined me for my optimism,” says Fin24 user Jeremy Samson, who owns a company that imports and prints various papers.
This is his story:
It’s difficult for me to warm to SARS right now. They are sitting on over R400 000 of my working capital, while they dither and drag their heels in paying out funds that I have overpaid them.
It’s quite OK to make the rules, but the least they can do is hold up their side of the bargain.
My problems started with the ridiculous provisional tax payment system. You take a guess what your future earnings will be and then pay according to this rough figure. If you underestimate it, they fine you. It’s bizarre. In this economic climate, it’s like asking someone who has been hit by a bus to estimate the time they will run in their next Comrades Marathon.
Crucial months
No one likes a fine, so I put in a fairly optimistic figure, but my business had a torrid trading season in the few months running up to Christmas. The rand tripped and fell and I didn’t get my prices up fast enough. I hardly made a cent in those crucial months, so I misjudged my income.
It’s been three months since I submitted my adjusted income with the claim. All I have had is countless requests for more information. Each question triggers another 60-day delay. The Chinese could build half a dozen power stations in this time. I have yet to be paid.
When you have an unexpected bad season, you end up sometimes buying more than you sell. This means… you guessed it… a Vat claim. I hope you practise some sort of religion because prayers are what you need to get your money back in a Vat claim nowadays.
There is a new rule that seems to have come out of nowhere. SARS doesn’t allow you to claim back the Vat on imports in the month of your clearing agent’s invoice.
This goes against everything I was ever taught about Vat. So, if they invoice you in February you can’t claim that as February’s input Vat - it has to go into March. I am not making this up. Since this change hasn’t been formalised yet, no one seems to know about it. I certainly didn’t. Instead of sending me a note advising me of the change, they sent me a penalty - R 15 000 - claiming that my R50 000 claim should actually have been a payment of R124 000.
Red tape
I employ around 25 people - this is up from just two a couple of years ago.
Last year, I invested in machinery, took on new staff and planned new projects.
This year, I am spending money on accounting fees and bureaucratic red tape.
SARS, you should be ashamed of yourselves. Sure your income statement might look healthy, but this is South Africa’s working capital you’re sitting on.
* SARS has been contacted for clarity on this issue and its feedback will be published.
Disclaimer: All letters and comments published in Fin24 have been independently written by members of the Fin24 community. The views are therefore their own and do not necessarily represent those of Fin24.
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