Since July is the start of tax season, many taxpayers may be in the middle of filing their tax returns but what about the non-compliant taxpayers that may find themselves on the wrong side of the South African Revenue Services (Sars)?
Non-compliant taxpayers should not lose hope because the taxman does have some options available to them to help them out.
Voluntary Disclosure Programme
Tax Consulting SA said that taxpayers that have defaulted can use the Voluntary Disclosure Programme (VDP) to get some reprieve from Sars.
According to Sars, VDP is applicable to taxpayers who have tax defaults and want to get relief from penalties and avoid criminal prosecution.
Tax defaults can include submitting inaccurate or incomplete information to Sars or the failure to submit information to the taxman requested in relation to any tax type that Sars administers.
Sars said that defaulting taxpayers that want to apply for VDP need to meet the following requirements:
A defaulting taxpayer will be granted relief under the programme if the application meets the following requirements:
- The disclosure must be voluntary
- The disclosure is full and complete in all material respects
- The disclosure involves a default which has not occurred within five years of the disclosure of a similar default
- The disclosure involves a behaviour referred to in the understatement penalty table in Section 223 of the Tax Administration Act
- The disclosure would not result in a refund due by SARS
- The disclosure is made in the prescribed form and manner.
Compromise agreement
According to Tax Consulting SA, if a defaulting taxpayer does not have legal merits to pursue an objection or they do not meet the requirements of VDP then they should consider a Compromise of Tax Debt application.
Tax Consulting SA said that the compromise is aimed at helping taxpayers to decrease their tax liability by means of a compromise agreement which they will enter into with Sars.
“Where Sars is approached correctly, and the taxpayer’s financial circumstances warrant it, a tax debt can be reduced, and the balance paid off in terms of the Compromise,” Tax Consulting said.
Objection
According to Sars, If a taxpayer is unhappy with their tax auto-assessment or decision by the taxman then they can make an objection.
Taxpayers should take note that they cannot object to a self-assessment, such as Value-Added Tax (VAT) and Pay-As-You-Earn (PAYE), where no revised assessment has been raised by SARS.
Here are some examples of decisions you can object to:
- Late payment penalties for VAT, PAYE, Unemployment Insurance Contributions (UIC) and Skills Development Levies (SDL)
- Late payment penalties on provisional tax
- Late payment interest on provisional tax
- Late payment interest on VAT and PAYE (not UIF or SDL)
- Late submission/non-submission penalties on PIT, CIT and PAYE.
Taxpayers can submit an objection within 80 days of the date of the Sars auto-assessment.
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