ACQUIRING
Sold to the
highest bidder
…unless you didn’t pay VAT
BY LOUIS BOTHA
B
efore buying anything, a purchaser should
always be aware of all its obligations. This is
one of the lessons to draw from the decision
in Sheriff of the High Court, Piketberg and another
v Lourens; In re: Standard Bank of South Africa Ltd
v Trustees for the time being of the Eila Trust and
others [2016] 4 All SA 239 (WCC). In this case the
court had to decide, among other things, whether
the sale of a property in execution could be set aside,
where the purchaser had not met his obligations in
terms of the Value-Added Tax Act, No 89 of 1991
(VAT Act), read with the conditions of sale.
Facts
The respondent, Lourens (L), purchased property at
an auction where it was sold in execution, but then
refused to pay the VAT amount, R88, 200, which was
due in terms of the transaction. This was despite the
fact that clause 4.7 of the conditions of sale placed
the obligation to pay transfer duty or VAT attracted
by the sale on L as the purchaser and after the second
applicant, the judgment creditor, had demanded the
amount from L. As a result, the property could not be
transferred into L’s name. It was not in dispute that L
inspected the property and the conditions of sale, and
that at the auction L and his representative did not
make enquiries about whether the first respondent,
The Eila Trust (ET), whose property was being sold,
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Residential Handbook 2016/17
was a VAT vendor. L’s stated refusal to pay VAT was
because it was not disclosed to him prior to the sale
in execution.
The applicable legal provisions
In terms of s7(2) of the VAT Act, where the seller of
a property is a VAT vendor, the seller is liable to pay
the VAT on the purchase price to the South African
Revenue Service (SARS). In terms of s9(15) of the
Transfer Duty Act, No 40 of 1949 (TD Act), transfer
duty will not be payable in respect of the acquisition
of any property, where VAT is payable in terms of that
transaction provided that following requirements are
also met:
• The seller has made a declaration to SARS in the
prescribed format that the VAT has been paid to him
and that he has accounted for the VAT; or
• That the seller has provided security to SARS
where the VAT has not yet been paid; and
• SARS has issued a certificate stating that the requirements of s9(15) have been met.
Where the seller is not a VAT vendor, transfer duty
will be payable by the purchaser in terms of s3 of the
TD Act. The same principle will apply if neither the
seller nor the purchaser are VAT vendors. From a
VAT perspective, it is also important to keep in mind
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