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Client was in a legal battle with a supplier. Our client won the case and the other party was instructed by court order to pay our client's legal fees amounting to R520 000.00. Our client did claim input VAT when incurring the legal expenses originally. No VAT amount was indicated on the court documents where the amount to be paid out was stipulated.

Is VAT applicable on this transaction? Is output VAT payable on this "reimbursement" of legal fees? And if so what section of the VAT act deals with this?


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tracyd
 User  tracyd asked on 15 Mar. 2016

 

2 answers

Dee Bezuidenhout
 Expert Dee Bezuidenhout answered question on 16 Mar. 2016
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I would say the settlement is deemed to include VAT as I believe it falls within the definition of "consideration" in section 1 of the VAT Act, read together with S7(1)(a).


Chantel Nunes
 Expert Chantel Nunes answered question on 11 Apr. 2016
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Hi,

To claim, or not to claim? That is the question!

Not sure whether you can claim input tax or not? I understand your dilemna. On one hand, if you don't claim, you'll lose out on a vital input tax saving. On the other hand, if you claim when you're not supposed to... you'll get penalised up to 200% of the value by SARS! What do you do?

But I have the solution for you! Bring your documents to the Vat Masterclass and Dee will clarify if you should claim or not. And if so, how to show the claim on your VAT201 form.

Simply click here to register: https://vatmasterclassseries.fspsecure.co.za/?ext_code=102757



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