VAT refunds are a statutory entitlement under South African tax law. Yet for many compliant businesses, particularly in capital‑intensive sectors, refunds are increasingly delayed for extended periods with little explanation.
In a recent matter involving a VAT refund exceeding R48.9 million (excluding interest), Nexia SAB&T successfully managed a client’s VAT affairs from initial submission through verification, audit escalation, formal complaints and, ultimately, High Court litigation.
Before the matter could be argued in court, the full refund was paid by SARS, together with interest and a contribution towards costs.
While attorneys and senior counsel were formally instructed at the final stage, the dispute was resolved on the strength of the compliance, procedural discipline and evidentiary foundations prepared by Nexia SAB&T.
VAT refunds under increasing administrative pressure
The VAT Act and Tax Administration Act permit SARS to withhold refunds only under narrowly defined circumstances, most notably while a verification, inspection or audit is actively under way.
In practice, many vendors encounter:
- prolonged verifications with no defined end date,
- repeated information requests covering the same material,
- unresolved complaints despite acknowledgment, and
- refunds reflected on SARS’s systems but not released.
Where refunds fund working capital or project expenditure, these delays can create significant financial and operational risk.
Tax payer profile
The client in this matter was:
- a South African operating company in the renewable energy sector;
- fully VAT‑registered and tax‑compliant at all relevant times; and
- carrying no outstanding tax debt or submission failures.
Across four VAT periods in 2025, SARS’s own VAT statement of account reflected refundable credit balances in excess of R48.9 million.
Nexia SAB&T’s role: full VAT lifecycle management
Nexia SAB&T was appointed to manage the client’s VAT affairs end‑to‑end, including:
- preparation and submission of VAT201 returns;
- compilation of VAT schedules and reconciled control accounts;
- assembly of supporting documentation for each VAT period;
- responding to section 46 information requests;
- managing SARS verifications and audit interactions;
- lodging and tracking formal complaints; and
- determining escalation points in terms of the Tax Administration Act.
When administrative remedies failed, Nexia SAB&T briefed external attorneys and senior counsel with a complete, litigation‑ready evidentiary bundle, enabling immediate enforcement action.
Why the dispute arose
By mid‑2025:
- one VAT period had been selected for verification and finalised by SARS with no adjustments;
- the remaining VAT periods were not under active verification, inspection or audit;
- the client’s tax compliance status reflected “Compliant” across all categories; and
- no tax debt existed against which SARS could lawfully set off the refunds.
Despite this, SARS did not authorise payment.
Two formal complaints were lodged with SARS and acknowledged, yet no resolution followed.
Nexia SAB&T’s escalation approach
Rather than informal engagement or reactive correspondence, Nexia SAB&T followed a structured escalation strategy.
Compliance built for enforcement
Each VAT period was supported by a comprehensive evidentiary pack, including:
- VAT schedules cross‑referenced to invoices;
- supplier and customer tax invoices;
- proof of payment and bank statements;
- lease, project and financing documentation; and
- reconciled VAT control accounts.
Documentation was prepared to withstand litigation scrutiny, not merely administrative upload.
Procedural discipline
All engagement with SARS was conducted in writing, with strict adherence to statutory timelines and escalation mechanisms. This ensured that SARS’s continued withholding of the refunds was demonstrable, objective and reviewable.
Litigation‑ready briefing
When it became clear that SARS would not resolve the matter administratively, Nexia SAB&T briefed attorneys and senior counsel with a complete record, including:
- supporting financial schedules;
- SARS correspondence and verification notices;
- complaints management records; and
- the legal basis for enforcement.
As a result, legal proceedings were instituted without delay and without further fact‑finding.
Outcome
Following service of a section 11(4) notice and preparation for a High Court application:
- SARS issued further information requests, which were answered immediately;
- SARS confirmed that verifications had been finalised; and
- SARS elected not to pursue additional site or documentary inspections.
Before the scheduled hearing date, SARS:
- paid the full VAT refund exceeding R48.9 million;
- paid interest in terms of the VAT Act; and
- made a contribution towards costs.
The application was removed from the court roll only after payment was confirmed.
Why this case matters
This outcome was not achieved through last‑minute litigation pressure. It was the result of:
- technically correct VAT submissions;
- continuous compliance management;
- defensible documentation;
- strategic use of statutory escalation mechanisms; and
- litigation used as an enforcement tool of last resort.
By the time senior counsel was briefed, the matter had already been resolved on paper.
Key lessons for taxpayers
- VAT refunds are legal entitlements, not discretionary payments.
- Compliance must be defensible well before disputes arise.
- Complaints without evidence rarely lead to resolution.
- There is a point at which administrative delay becomes unlawful.
- Effective advisors manage the full dispute lifecycle, not only the tax return.
Nexia SAB&T’s capability
This matter illustrates Nexia SAB&T’s ability to:
- manage high‑value VAT refunds;
- defend VAT positions under audit and verification;
- run disputes from submission through litigation;
- integrate tax, compliance and legal strategy; and
- provide legal teams with decisive evidentiary support.
Nexia SAB&T acts not only as a tax advisor, but as a strategic partner in tax dispute resolution and risk management.
Client, legal representatives and commercial details have been anonymised. All amounts and outcomes are supported by SARS correspondence and payment records.
