Legal opinion confirms truckers' VAT concerns

Two lawyers with a speciality in commercial law have confirmed that Kevin Martin, chairman of the Durban Harbour Carriers’ Association (DHCA), would appear to be correct in his interpretation of the VAT Act and the new Customs Act (‘Truckers face VAT shock’, September 26, 2014). Ayanda Masina, candidate attorney in the corporate and commercial law department of Shepstone & Wylie, explained her understanding of the current provisions and the proposed amendments to these acts. “The VAT Regulation requires a transporter of goods (in certain circumstances) to register as a remover in bond,” she told FTW. “The normal rules that are applicable to removers in bond, as per the Customs and Excise Act, will be applicable to transporters. “The proposed amendments and provisions in the Customs Control Act will have implications on transporters that transport goods by truck for a reward (any form of consideration), as it will require them to be registered as licensed carriers. And furthermore, such a licensed carrier will be regarded as a licensed remover in bond. As such, he will be liable for any duties or taxes due on the goods that he is transporting. “But only while the goods are being transported. Once the goods have reached the destination ref lected on the bill of entry, the transporter will no longer be responsible/liable for any taxes.” Nicola Nel, associate attorney at the Durban office of Bowman Gilfillan, agreed with Masina that the relevant provisions of the two acts confirmed Martin’s interpretation. “The provisions seem to suggest that cartage contractors may well be held to be liable for unpaid VAT or other duties as Martin suggests,” she told FTW. “It seems there definitely is a story, especially considering that Sars likes to keep its options open in terms of having people to sue!” Interestingly though, Nel added, the Regulation does distinguish between cartage contractors which are ‘agents’ as defined in the Regulation and those which are not. The Regulation expressly states that noncompliance will result in the imposition of VAT, but the same provision is not included in the section which prescribes the duties of cartage contractors (para 12(5)). And, said Nel: “This seems to suggest that an ‘agent’ in terms of the regulation is envisaged as something more than merely a truck operator which acts on another agents instructions in collecting/delivering certain containers (ie, where he does not know the nature of the contents or any other further information). “However, there is also section 99 of the Customs and Excise Act, which allows Sars to claim unpaid VAT or duties from agents in any event.”