SARS issued an Interpretation Note on 16th March 2016 setting out their requirements concerning documentary proof required for the zero-rating of goods and services. I suggest that you review its contents. For instance the requirements concerning the sale of an enterprise as a going concern are the following:
a) A copy of the contract of sale between the recipient and the vendor confirming in writing that
i) the enterprise or part thereof –
· is disposed of as a going concern; and
· will be an income-earning activity on the date of transfer thereof;
ii) the assets necessary for carrying on such enterprise or part thereof must be disposed of to the purchaser; and
iii) the consideration for the supply includes VAT at the zero rate;
b) Tax invoice; and
c) The recipient’s Notice of Registration.
I would suggest that a tax invoice reflecting the transaction at the zero-rate is always attached as an annexure to the sale agreement and the description of the seller and the purchaser both contain the VAT registration numbers in that description. I suggest that the appropriate warranties in relation to the correctness of the information also be included.
