Page 451 - Juta's Indirect Tax

IN 61 VaLue-added tax act: InterPretatIOn nOtes IN 61
Result:
As vendor A’s failure to make payment on 25 March 2010 did not result in a nancial loss to the state having regard to the fact that vendor A is liable to account for output tax and vendor B is entitled to an input tax deduction, the Commissioner may remit the interest imposed in whole or in part.
Should vendor A fail to pay the VAT in respect of a standard-rated supply made to an end-consumer, the state would suffer a nancial loss (including the loss of interest) having regard to the fact that vendor A is liable to account for output tax and the recipient is not entitled to an input tax deduction.
(b) The person concerned did not bene t nancially
The second alternative in 2.1 allows the Commissioner to consider the remission of interest, in whole or in part, taking
into account whether the person who failed to pay the tax, or any other person under the control of the person or acting on behalf of the person did not bene t nancially by not making the payment within the prescribed period. In determining whether the person bene ted nancially from the non-payment of the tax, interest must be taken into account. The nancial bene t is generally evidenced by the person earning interest or reducing the amount of interest paid on, for example, an overdraft facility.
Example 3 — Circumstances under which interest may not be remitted
Facts:
A vendor failed to pay on the due date the VAT levied on the importation of goods into the Republic of South Africa.
Interest was charged in respect of the late payment of VAT. Result:
As the vendor bene tted nancially by not making the payment of VAT within the prescribed time, interest may not be remitted.
Example 4 — Circumstances under which interest may be remitted
Facts:
A vendor led its two monthly VAT return for February on 25 March 2010. In order to ensure timely payment, the vendor initiated the transfer of funds on 23 March 2010. The vendor’s bank account was debited on 23 March 2010 but SARS’s bank account was credited on 1 April 2010 and interest was levied on the late payment of the VAT amount due.
Result:
As the vendor’s account was debited on 23 March 2010 the vendor did not bene t nancially by not making the payment on 25 March 2010. Accordingly, interest may be remitted for the period during which the VAT was not paid.
4.3.2 From 1 April 2010 – Circumstances beyond the control of a person
Circumstances beyond a person’s control are generally those that are external, unforeseeable, unavoidable or in the nature of an emergency, such as an accident, disaster or illness which resulted in the person being unable to make payment of VAT due.
Example 5 — Circumstances beyond a person’s control
The following examples are generally considered to be circumstances beyond the control of a person and would, accordingly, qualify for a remission of interest:
• The destruction by re, ood or other natural or human-made disaster of the person’s place of business records.
• Key personnel not available due to sudden resignation, ill health or death.
• A person has initiated an electronic funds transfer (EFT) payment timeously and such payment is not made due to a banking system failure.
Example 6— Circumstances that are generally not considered to be beyond a person’s control
The following examples are generally not considered to be circumstances beyond the control of a person and would, accordingly, not qualify for a remission of interest:
• A person’s nancial position.
• Failure to timeously initiate an EFT payment instruction to a nancial institution.
• A misunderstanding or lack of knowledge of a VAT liability.
• Misconduct on the part of the person or any other person under the control or acting on behalf of that person. • Negligence on the part of the person or any other person under the control or acting on behalf of that person.
Juta’s IndIrect tax 2016 443