The South African Revenue Services will conduct audits on your tax affairs, with or without your knowledge.

Types of Audits:

1. Desk top Audit

SARS will compare all information they can access about you and/or your company, with Vat returns submitted, PAYE etc, and raise assessments for any discrepancies.

      

1. Physical audit

You will be notified in a letter, delivered at your place of business, that an audit will be conducted on your affairs.

 

 

This then begs the question, are we compelled to co-operate with SARS, and furnish all the information?

 

The answer is not straight forward, but I normally instruct client not to panic, and succumb to the pressure. Ask for an engagement letter from the SARS official concerned. Contact your tax practitioner or attorney before co-operating.

 

Bear in mind, that SARS is mindful of their mistakes, and will treat the matter with care. You are however not obliged to cooperate if the officials are rude and intimidating. Do not also incriminate yourself. Remain silent (remember that right)

 

Whilst the officials will claim that you are audited in terms of the Income Tax Act of 1962, they might be in violation of the Constitution or the Criminal Procedure Act, if inference of a crime is made.

 

If SARS are in violation of the Constitution, the audit cannot proceed!

 

 

Summoned to Tax Court

 

A summons is only valid, if its delivered by hand, to the business/person concerned. It looses it relevance if the above procedure is not followed.

The tax courts, due to simple mistakes, issue many summonses. I.e.

Returns and assessments could have been paid, but not recorded by SARS. Scrutinize bank statements carefully, find receipts and proof, and furnish the documentation.

Again, it’s important, not to panic.

For more serious cases, you can use your right as a taxpayer, to request that your affairs are re-examined.

If you have applied for tax amnesty, make sure you are not subjected to enforcement action, when Tax amnesty has been applied for.

In many instances, the cases can be settled with the prosecutor, and never really reach court, save for criminal cases like fraud or money laundering.

 

Author: Sean Goss  sgafc@mweb.co.za

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