A taxpayer employed a new bookkeeper who discovered that the previous bookkeeper did not claim customs VAT of approximately R5 000 000 for goods imported since June 2018.
Would the taxpayer still be able to claim this customs VAT and would there be any implications if a claim with SARS is subsequently submitted? Is there a limited period in which VAT vendors are allowed to claim customs VAT (i.e. a 5-year period in which input tax deduction is allowed)?
The VAT Act
Section 16(3)(a)(iii) of the VAT Act determines that a VAT vendor may offset against output tax attributable to a tax period the amount of input tax charged in terms of section 7(1)(b) of the VAT Act in respect of goods imported into the Republic by the vendor and released in terms of the Customs & Excise Act during the tax period.
Proviso (i)(aa) to section 16(3) of the VAT Act determines that where any VAT vendor is entitled to a deduction under any of the sub-sections of section 16(3) of the VAT Act, the VAT vendor may deduct the amount in a tax period which ends no later than five years after the end of the tax period during which the goods were entered for home consumption (Home Use) in terms of the Customs and Excise Act.
Application of the principles
The Customs VAT may be claimed in any tax period ending within 5 years from the end of the tax period in which the goods have been cleared for Home Use by Customs and Excise. The date that goods have been cleared for Home Use is reflected on the Customs Release Notification.
As June 2018 and later clearly falls within the 5-year period, the input tax deductions may be made in the next tax return to be submitted. There are no special SARS processes that must be followed.
Further webinar commentary on Input – Customs Duty can be accessed here.