VAT RISK REVIEWS: YOUR VAT RETURN MAY BE CORRECT. BUT IS THE PROCESS BEHIND IT?
Published: 20 October 2026
Author: Tender Da Gama
Reading Time: 5 minutes
A VAT return can be submitted on time.
The figures can reconcile.
The return can be accepted.
And the business can still have weaknesses in its VAT control environment.
Why?
Because the VAT201 is the output of a process.
What sits behind the VAT201?
Before a VAT return is submitted, information normally passes through several stages:
Transaction → invoice → accounting system → VAT classification → reconciliation → review → VAT201
Every stage presents an opportunity for error.
Potential risks can arise from:
Customs VAT and the timing of claims
Businesses claiming VAT paid on imported goods need to consider when the customs VAT may be claimed and whether the relevant supporting documentation is available.
The timing of a claim should be reviewed alongside the applicable requirements and the import documentation supporting the transaction. Errors in the timing or supporting records can affect the accuracy of the VAT return and the strength of the business's VAT control environment.
The future of VAT makes this even more relevant
SARS's proposed VAT Modernisation Model is built around e-Invoicing, an Interoperability Framework and e-Reporting, with a longer-term objective of enabling more automated VAT administration and pre-filled returns.
The proposals remain subject to consultation and further development. SARS's consultation process closed on 16 October 2026.
These developments highlight the growing importance of data quality, accurate transaction classification and effective controls throughout the VAT process.
What should a VAT risk review consider?
A practical review may consider:
1. VAT treatment Are transactions consistently classified?
2. Documentation Can the business support its input and output VAT positions?
3. Reconciliations Do the VAT records reconcile to the accounting system?
4. Customs VAT and imported services Are customs VAT claims made at the appropriate time, supported by the relevant import documentation, and are imported services appropriately identified and assessed?
5. Intercompany transactions Are management fees, recharges and other group transactions reviewed for VAT?
6. Governance Are responsibilities clearly allocated and documented?
The real question
If SARS asked your business tomorrow:
“Show us how you built your VAT201.”
How long would it take to provide the answer?
A strong VAT control environment should allow the business to trace the VAT return back to the underlying transactions and supporting documentation.
That is what helps make a VAT position more defensible.
VAT compliance is not only about filing accurately. It is about having a process that can withstand scrutiny.
TCS Advisory & Compliance assists businesses with VAT health checks, risk reviews, compliance assessments and practical tax governance.