VAT vendors who make taxable supplies of goods or services are obliged to issue tax invoices to the recipients of such supplies within 21 days of having made such a supply.
A valid tax invoice is of utmost importance because without such a document a vendor, being the recipient of a supply, is not entitled to claim any input tax deductions in respect of goods or services acquired in the course or furtherance of making taxable supplies.
The requirements for a valid tax invoice are contained in the VAT Act; one of these requirements being that a tax invoice for supplies in excess of R5 000 must reflect the name, address and VAT registration number of both the supplier and the recipient of the supply. A tax invoice for supplies less than R5 000 must only contain such details of the supplier.
There has recently been a great deal of confusion regarding the address that should appear on a tax invoice, i.e. whether it is the physical address, the postal address or any other address.
The result of this uncertainty and inconsistency is that vendors, being the recipients of taxable supplies, found that SARS auditors sought to disallow their input tax claims on the basis that they possess invalid tax invoices. Recipients, in fear of having their input tax deductions disallowed, refused to make payment of tax invoices unless suppliers changed the addresses on their tax invoices to reflect the physical addresses.
The VAT Act simply requires that the ‘address’ of the supplier and that of the recipient (for tax invoices in excess of R5 000.00) be reflected on the tax invoice. The term ‘address’ is not defined in the VAT Act and regard must therefore be had to the ordinary meaning of the word. ‘Address’ is defined in the Oxford English Dictionary as the place where a person lives or an organisation is situated; particulars of this, especially for postal purposes.
Based on the ordinary meaning of the word, it seems that a person’s address may therefore be the place at which they wish reside, rather than being strictly limited to a person’s physical address. There is therefore no legal justification for the view taken by the SARS. However, the latin term domicilium citandi et executandi, roughly translated, means the physical address at which legal notices and process can be served on you. A post office box address is not sufficient for the purposes of service of legal process and should be avoided.
In our experience in dealing with SARS VAT Audits, we have found that it is better if the VAT invoice contains the physical address and not the postal address.
It is also important to confirm that the physical address on the VAT invoice is the same as what SARS have on the system for the VAT Vendor. This is extremely important especially if you are attending to your own VAT and the income tax profile is with a different entity such as your Accountant / Tax Practitioner.
Please let us know what the correct physical address for your business should be and we can amend or confirm that we have the correct address on the system for your business.
If the address on the VAT invoice and the address we have on the SARS system for the business is not the same, SARS will disallow the invoice.
With VAT fraud being so high, SARS is focusing on VAT invoices and VAT supporting documents. Every element of the invoice is scrutinised to make sure it is 100% correct. If there are issues with the address on the VAT, it causes the VAT to be disallowed and delays in SARS paying out the VAT refunds. Please feel free to contact us to make sure we have the correct physical address on the system for your business and that it agrees with your VAT invoice. Don’t let something as simple as an incorrect physical address be the reason SARS disallows your VAT.
By Laverne Geswint
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