Case Study: Successful Resolution of SARS VAT Dispute for Retail Client

Our client, a national retail business with multiple outlets across South Africa, received a VAT assessment from SARS following a verification of their submission of VAT returns covering the 2017–2022 tax periods. The assessment disallowed a substantial portion of input tax claims and included penalties and interest totalling approximately R 5 million rand.

SARS’ findings alleged non-compliance with documentation requirements under section 16(2) of the VAT Act and questioned the validity of certain supplier invoices.

The Challenge

The client faced:

• A significant financial exposure due to disallowed input tax.
• Understatement penalties and interest applied under section 213 of the Tax Administration Act.
• Reputational risk and possible disruptions to ongoing operations.

Time was also critical, the deadline for submitting a valid objection under the Tax Administration Act No. 28 of 2011 was approaching, and the assessment threatened to impact cash flow.

Our Approach

We adopted a structured and evidence-based strategy to resolve the dispute efficiently and within statutory timeframes:

1. Comprehensive Audit Review – We examined SARS’ assessment raised and identified technical and factual inconsistencies in the disallowed input VAT.
2. Verification of Documentation – Each supplier invoice was reconciled against supporting, documents.
3. Legal and Technical Submissions – We prepared a detailed response to SARS including supporting references to legislation and case law.
4. Engagement with SARS – Constructive engagement with the SARS auditor to resolve the dispute and provide any additional supporting annexures requested.

The Outcome

Following our submission and representation:

• SARS upheld the objection, withdrawing the VAT assessment in full.
• All penalties and interest were remitted, resulting in substantial savings for the client.
• The dispute was resolved between 90 to 120 business days without the need for Alternative Dispute Resolution (ADR) or litigation.

Why Malander Advisory

The successful resolution provided immediate financial relief and restored the client’s tax compliance status. We also assisted the finance team in strengthening internal VAT control processes to mitigate future audit risks.

If your business is facing a SARS VAT assessment or dispute, our team can assist with a tailored strategy to achieve a favourable resolution.