Need advice on SARS s240 for a VAT-recovery idea I'm working on (import VAT)

[uzrbuilds]

Hey guys, hoping someone here who actually knows tax can set me straight, because I've hit the limit of what I can figure out on my own by reading.

Bit of background: I'm 20, based in Cape Town, and I've been digging into something that seems like a real gap. When a VAT-registered business imports goods they pay import VAT at customs, and from what I can tell a lot of them never actually claim it back as input tax. Not because they can't, but because they've got the wrong paperwork, their bookkeeper claims off the freight/shipping invoice when SARS actually wants the customs bill of entry and the EDI release notification. So the claim never gets supported properly and the money just sits with SARS. And you can apparently go back 5 years on it.

The idea I've been looking at is basically doing the boring part for them, pulling the correct customs docs and reconciling the import VAT that was paid but never claimed, then handing it over so the client's own registered tax practitioner checks it, signs and files the VAT201. I wouldn't be filing anything myself, that stays with their practitioner.

I've read up on the SARS side as much as I can (the ATV formula, s16(2)(d), the 5-year window, the set-off stuff under s191) but there are two things I genuinely can't answer from Google and I don't want to get wrong:

1. Section 240 - if all I'm doing is retrieving documents and reconciling numbers, and the client's own registered practitioner is the one who decides what goes on the return and files it, does that keep me outside the tax-practitioner registration requirement? Or would SARS still see that as "assisting in completing a return"?
2. The fee - what's the sensible/compliant way to charge for something like this? I know SARS doesn't allow percentage-of-refund type fees for registered practitioners, so I'm trying to understand where the line is for someone who's just doing the retrieval side and isn't a practitioner.

Not asking anyone to do it for me, and I'm going to get a proper opinion from a tax attorney before I actually take anyone on — just trying to make sure I understand the rules properly first so I don't walk into that conversation clueless. If anyone here has dealt with import VAT / customs or knows the s240 stuff, I'd really appreciate the input. Even a "you've got this wrong because…" is useful.

Thanks all

 

[EmmanuelGoldstein]

I think you have a lot to learn, kiddo. Businesses simply do not fail to claim VAT

 

[uzrbuilds]

I think you have a lot to learn, kiddo. Businesses simply do not fail to claim VAT

Yeah, I'll be first to admit I've still got a lot to learn on VAT, I'm reading on it every day. But I think we actually agree on the main bit: general input VAT, sure, everyone claims that automatically. Import VAT for low-to-mid tier importers is a different animal. The process is a pain, and there's a real chunk of them who just never get to it, especially going back 5 years, because digging up old customs files is tedious as hell. That tedious part is exactly what I take off their hands.

It's a narrow niche, I'll give you that, but the pool inside it is bigger than people think. And to be clear I'm not doing this solo or off the books, the client's own registered practitioner reviews and signs everything before it goes near SARS. I handle the retrieval and reconciliation, they own the return.

 

[yogidabear]

Apologies but I can not see how this is a business opportunity. In over 20 years we have never not claimed customs VAT on a shipment. Anybody who has neglected to do this, must have such a small amount due, it would not be worth pursuing.

 

[SauRoNZA]

Apologies but I can not see how this is a business opportunity. In over 20 years we have never not claimed customs VAT on a shipment. Anybody who has neglected to do this, must have such a small amount due, it would not be worth pursuing.

I was about to say even a private individual can claim this VAT back and it's just not worth the effort, so more than likely it's a choice, not an oversight.

 

[uzrbuilds]

Apologies but I can not see how this is a business opportunity. In over 20 years we have never not claimed customs VAT on a shipment. Anybody who has neglected to do this, must have such a small amount due, it would not be worth pursuing.

yeah fair, and for a setup like yours i genuinely get it, 20 years with a proper clearing agent, the vat flows through fine, no argument. that kinda narrows who i'm even talking about. but my point isn't people forgetting to claim a small amount, it's businesses that did claim, just off the courier/forwarder invoice instead of the actual customs bill of entry + release notification. so it lands on the vat201 and looks totally fine, right up until sars asks for the customs docs on a verification and reverses it. and "small amount" kinda depends on volume, 15% across a year of imports isn't nothing once you're past a few containers. genuine q since you've clearly done this a while, is the weak point ever the paperwork rather than the claim itself, or do you find the proper customs docs are basically always on file

 

[yogidabear]

We have dealt with just about every forwarder in SA at some point, and like I said have not missed a claim. Some forwarders we have left as their paperwork is not great, or they were slow to pay our VAT over to SARS. 15% ongoing loss would sink us, and not sure what company can just absorb that.

 

[Zellephant]

We have dealt with just about every forwarder in SA at some point, and like I said have not missed a claim. Some forwarders we have left as their paperwork is not great, or they were slow to pay our VAT over to SARS. 15% ongoing loss would sink us, and not sure what company can just absorb that.

Yeah, I’m thinking the same thing. There is no way we could remain profitable if we weren’t claiming our import vat back in full. It’s a critical function of our product pricing structure.

if there is really a business case for this, by all means take it on, but I cannot imagine many businesses aren’t doing this properly already