VAT Logic | VAT Review Specialists based in Cape Town, South Africa

VAT Recovery Review

The primary purpose of the VAT Recovery Review is to identify VAT savings for the company.

We examine every financial transaction line-by-line to determine whether the VAT portion of the transaction has been treated correctly. This examination enables us to quantify the understatement of input tax and the overstatement of output tax.

We discover and recover VAT overpayments and unclaimed VAT benefits, typically through:

   Increasing Input Tax deductions;

   Decreasing Output Tax payments;

   Improving the Apportionment Ratio (for companies with mixed VAT supplies); and

   Recovering or reducing interest and penalties levied by the Tax Authority.

The client benefits of a VAT Recovery Review include:

   Minimal disruption to client’s business whilst Vat Logic conducts the VAT Recovery Review;

   Maximum recovery of VAT in a short period that improves company profits and cash flow;

   Ongoing VAT savings with the associated increase in profitability and cash flow (at no extra cost);

   Improved accounting systems and VAT controls;

   Increased shareholder value; and

   Entirely risk-free.

The VAT Review does not compete with a company’s internal or external financial audits but complements the audit processes. The auditor’s mandate does not account for large-scale substantive transactional testing. They perform testing solely to detect errors based on high materiality levels. By contrast, VAT Logic uses VATXTRACT, our proprietary VAT auditing and financial data analytics software, to interrogate millions of VAT-related transactions on a line-by-line basis to quantify and aggregate the total VAT recovery.

After the initial VAT Recovery Review is complete, many of our clients request us to do periodic VAT Recovery Reviews to ensure that VAT leakage is eliminated.

VAT Risk Review

We usually discover VAT risks as a natural outcome of the VAT Recovery Review. VAT Logic will also conduct a VAT Risk Review upon request from the client.

We identify any risks in treating VAT and provide solutions to address or mitigate such risks through constructive engagement with the Tax Authority in the dispute resolution process.

The client benefits of a VAT Risk Review include:

   Meet VAT compliance obligations;

   Reduce VAT reporting errors;

   Avoid VAT disputes with the Tax Authority; and

   Minimise the risk of Tax Authority fines, penalties, and interest charges.

Step 1 - Data extraction:

Vat Logic provides the client with the financial data requirements for the review period (detailed general ledger listings, trial balances, accounts payable master data, copies of VAT returns, and annual financial statements). We provide the client with a secure upload portal. The client uploads the relevant financial data. We evaluate the data sets for accuracy and completeness by reconciling the general ledger with the trial balances and VAT accounts with the VAT returns.

Step 2 - Data analysis:

We analyse the data offsite with VATXTRACT (our proprietary VAT auditing and financial data analytics software) to identify potential VAT recoveries. We check the actual allocation of VAT, per the accounting records, to the source transaction on a line-by-line basis to determine the company’s VAT treatment of source transactions. We then determine the expected VAT treatment of source transactions, considering a combination of VAT rulings applicable to the company, the relevant supplier’s vendor status, the general ledger category and description per the company’s accounting records. These two analyses generate an Exception Report that shows the variances between source transactions’ actual and expected VAT treatment.

Step 3 - Verification:

The variances between actual and expected VAT treatment of source transactions are verified by reviewing supporting documentation (on a sample basis) and interaction (minimal) with the company’s accounting staff.

Step 4 - Reporting:

We provide comprehensive reports of the line-by-line VAT analysis (with supporting schedules) that detail the VAT overpayments and unclaimed VAT benefits, together with the relevant legislative support for all results included in the report. Our reports safeguard against any potential understatement penalties that the Tax Authority may levy. We are also able to give the benefit of legal privilege where required. Once the client approves the VAT savings, we assist the client in recovering VAT resulting from overpaid VAT and unclaimed VAT benefits. The VAT recovery is either an offset from a VAT liability or a refund from the Tax Authority.

The advantages of our VAT Review process, developed and modified over the past 20 years, include the following:

Data is secure at all times; quick results; conducted offsite; all VAT overpayments and unclaimed VAT benefits over the review period are identified and quantified, resulting in substantial VAT savings; audit file for claims, risk-free; no upfront fees; minimal interference with accounting staff; little to no input from your internal resources; internal deficiencies are identified and addressed; VAT reviews can be conducted at any time of the accounting cycle, irrespective of financial month-ends, year-ends, auditing and budgeting.

After completing the VAT Review, VAT Logic can assist the client with monthly or annual VAT Reviews to ensure that corrective action has eliminated all VAT leakage.

VATXTRACT

   VATXTRACT is our proprietary VAT auditing and financial data analytics software

   It is high-performance analytics technology combined with comprehensive functionality

   We have developed and modified the scripts, macros and algorithms over 20 years

   VATXTRACT can interrogate millions of VAT-related transactions on a line-by-line basis

   It can access big and complex financial data on any IT platform

   VATXTRACT has been developed and is operated by our very experienced data analytics staff

CONFIDENTIALITY

The very essence of our business is collaborating with confidential client data and information. VAT Logic takes the confidentiality of client data and documents very seriously. We are a private company with no obligation to disclose any information or findings to the Tax Authority. We can provide the benefit of legal privilege where required. The VAT Reviews are subject to the strictest Confidentiality and Non-disclosure Agreements.

Data Security

   You upload a COPY of your data to our secure, remote Microsoft OneDrive server.

   Your data files are uploaded over a securely encrypted HTTPS.

   Computers are protected by Windows Security and Windows Defender anti-virus software.

   Data is encrypted by way of Windows Bitlocker and Windows EFS.

Our VAT Review Services