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VAT Explained on party and party costs

The issue of claiming VAT on fees and disbursements in your bill depends on the question whether you will be out of pocket or not.

The scenario is as follows:
A. You are a VAT vendor, you receive a tax invoice for R100-00 +VAT, you pay the VAT and claim it back, you are out of pocket with R100-00 – you claim the R100-00 in the bill, it is taxed and R100-00 is refunded to you (or a % thereof) – it is not income for which you have supplied goods or services, you have not issued a tax invoice so you do not have to declare it and pay any VAT on it to SARS. The unsuccessful litigant pays R100-00 in terms of the taxed bill - no claim for VAT against SARS. SARS received R14-00 from the supplier of goods or services and paid it back to you – not out of pocket.

B. You are not a VAT vendor, you receive a tax invoice for R100-00 +VAT, you pay the VAT but cannot claim it back, you are out of pocket with R114-00 – you claim the R100-00 + VAT in the bill, it is taxed and R100-00 + VAT is refunded to you (or a % thereof) – it is not income for which you have supplied goods or services, you have not issued a tax invoice so you do not have to declare it and pay any VAT on it to SARS, you receive no benefit, your out of pocket expenses (R100-00 + VAT ) or a portion thereof is merely refunded. The unsuccessful litigant pays R114-00 in terms of the taxed bill but has no claim for VAT against SARS, because there is no tax invoice, no goods sold or services rendered. SARS received R14-00 from the supplier or goods and/or services – not out of pocket.

Last modified on %PM, %07 %621 %2013 %13:%Jan

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