A VAT audit almost always starts in the same place: SARS asks for the input VAT listing supporting field 19 of your VAT201, then works down the largest claims by value, testing each against a valid tax invoice. What fails is rarely the principle of the claim — it is the invoice, the denied category, or an unexplained deposit that looks like unrecorded income.
Preparation is not something you do when the letter arrives. It is a set of habits that make the letter a filter-and-export exercise rather than a month of searching.
What SARS actually asks for
The request is usually specific and predictable.
| Item | What it is used for |
|---|---|
| Input VAT listing reconciling to the return | The starting point for everything |
| Output VAT listing | Testing that all sales were declared |
| Tax invoices for the largest input claims | Verifying each claim against a valid document |
| Bank statements for the period | Reconciling declared turnover to deposits |
| Customs documentation for imports | Substantiating import VAT claims |
| VAT264 declarations | For second-hand goods bought from non-vendors |
| Zero-rating proof | Export documentation where zero-rated supplies were declared |
| Credit and debit notes | Where adjustments were made |
You generally have 21 business days to respond. Upload everything in one complete, clearly named submission. See how to respond to a SARS verification request.
The five things SARS tests
1. Does the listing reconcile to the return?
The first check, and a surprising number of businesses fail it. The input VAT listing must add up to the figure declared on the VAT201. Where it does not, the conversation starts badly and the scope tends to widen.
2. Is there a valid tax invoice for each claim?
SARS works down the listing by value. For each claim tested, it wants a tax invoice meeting the statutory requirements.
What fails:
No recipient VAT number on invoices above R5,000
No physical address for the supplier
Headed "Statement", "Proforma" or "Quotation"
Descriptions like "services rendered" with no detail
No quantity or volume
Only an inclusive total, with no VAT amount and no statement that VAT is included
See what makes a valid tax invoice.
3. Were denied categories claimed?
The easiest finding to make, because the ledger accounts are usually labelled helpfully.
Entertainment, motor cars and sporting or social club subscriptions are denied. A trial balance with a VAT-inclusive balance in "Entertainment" alongside an input tax claim is visible before anyone opens an invoice.
See the expenses you can never claim VAT on.
4. Do declared sales match the bank?
SARS reconciles output VAT to deposits. Unexplained deposits are treated as income until you prove otherwise, and the burden of proof sits with you.
Where this bites: a suspense account with a meaningful balance, deposits with no matching invoice, and loans or capital injections recorded without documentation.
See what is a suspense account.
5. Are there duplicates?
Duplicate claims arise more often than people expect — an invoice received by email and by post, a supplier statement processed alongside the invoices it summarises, or a claim in one period repeated in the next.
SARS runs duplicate detection across value, date and supplier. It is mechanical and it finds them.
The three findings that recur
1. Defective invoices on large claims. The single most common. Prevented entirely by checking invoices at the point of receipt rather than at the point of audit.
2. Denied categories claimed by the system. Prevented by a chart of accounts that ring-fences entertainment and motor cars and flags them as no-VAT in the software. See what is a chart of accounts.
3. Unpaid creditors over 12 months. Where you claimed input tax and have not paid the supplier within 12 months, you must account for output tax on that amount. Businesses under cash flow pressure routinely have this exposure sitting unrecognised. Run an aged creditors report before every return, not just before an audit.
What triggers a VAT audit
A refund. Any refund, particularly a first one or an unusually large one, attracts scrutiny. See why is SARS holding your VAT refund.
Ratios outside the norm. Input VAT high relative to output, or a pattern that does not match your declared industry.
Sharp movements. A large change in either direction between periods.
Third-party data mismatches. SARS increasingly reconciles vendor-level data, and your supplier's declared output tax and your claimed input tax are two sides of one entry.
Being newly registered. New vendors get more attention.
A history of late filing or payment. Persistent non-compliance raises your risk profile.
Preparation: what to do before the letter arrives
These are habits, not tasks.
Attach source documents to transactions. Most accounting software allows the invoice to be attached to the ledger entry. Where that is done, producing an audit pack is a filter and an export. Where it is not, it is a search.
Reconcile the input VAT listing to field 19 every period, before submitting. If it does not tie, find out why then rather than eighteen months later.
Check invoices at receipt. A defect is cheap to fix on the day and expensive to fix inside a 21-business-day window when the supplier has gone quiet.
Empty the suspense account monthly. Unidentified deposits are the finding you cannot argue your way out of.
Run an aged creditors report before each return and adjust anything over 12 months old that you claimed input tax on.
Keep zero-rating documentation with the transaction. An export you cannot substantiate becomes a standard-rated supply, and you pay the 15% out of a price that never included it.
Keep everything for five years.
If a finding is raised
You get a letter of audit findings setting out the proposed adjustments and the reasons, and an opportunity to respond — generally within 21 business days — before an assessment is raised.
This is where the outcome is decided. A properly argued response with supporting documents can remove or reduce proposed adjustments entirely.
Where an invoice was defective, a corrected invoice obtained from the supplier may resolve it, depending on the circumstances and the stage.
Where an assessment is raised and you disagree, lodge a Notice of Objection within 80 business days.
Note what the assessment includes: the reversed input tax, interest at 10.25% per annum, and potentially an understatement penalty between 0% and 200% depending on the behaviour identified.
And note the multiplier. Because coding errors repeat, a finding in one period is typically extended across every open period. See what happens when SARS audits your business.
Frequently asked questions
How do I prepare for a VAT audit in South Africa? Keep source documents attached to transactions in your accounting system, reconcile the input VAT listing to the figure declared on each VAT201 before submitting, check invoices against the statutory requirements at the point of receipt, clear the suspense account monthly, and run an aged creditors report each period.
What does SARS ask for in a VAT audit? Typically the input VAT listing reconciling to the return, an output VAT listing, tax invoices for the largest input claims, bank statements for the period, customs documentation for imports, VAT264 declarations for second-hand goods, export documentation supporting any zero-rating, and credit and debit notes.
What triggers a VAT audit? Most commonly a refund claim, input VAT high relative to output, sharp movements between periods, third-party data that does not match, being a newly registered vendor, or a history of late filing and payment.
What are the most common VAT audit findings? Defective tax invoices on large claims, input VAT claimed on denied categories such as entertainment and motor cars, and input tax claimed on creditors unpaid for more than 12 months, which requires output tax to be accounted for.
Can I fix a defective invoice during an audit? Sometimes. Obtaining a corrected invoice from the supplier may resolve the issue depending on the circumstances and the stage of the audit. It is considerably easier before submission than after a finding has been raised, which is why invoices should be checked at receipt.
What happens if SARS disallows my input VAT? The input tax is reversed and becomes payable, with interest at 10.25% per annum and potentially an understatement penalty between 0% and 200%. Because coding errors repeat, a finding in one period is typically extended across all open periods.
How long do I have to respond to a VAT audit request? Generally 21 business days from the date of the letter. Upload everything in one complete, clearly named submission rather than in instalments, and request an extension before the deadline if you genuinely need one.
A filter and an export, not a month of searching
The businesses that handle VAT audits easily are not luckier. They keep invoices attached to transactions, reconcile the listing to the return every period, and clear the suspense account monthly — so producing an audit pack takes an afternoon.
Smartbook processes and files supporting documents monthly, checks invoices against the SARS requirements as they arrive, reconciles the input VAT listing before every submission, and handles audit and verification responses.
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Audit procedure and response periods depend on the notices issued — always work from the dates in your own SARS correspondence and take professional advice. General guidance, not advice on your circumstances.
Primary sources: SARS — Value-Added Tax · SARS — Tax Invoices · SARS — VAT404 Guide for Vendors · SARS — Short Guide to the Tax Administration Act