Global Courant 2023-05-15 15:04:05
The South African Revenue Service (SARS) has committed to paying VAT refunds to eligible taxpayers as and when they are due; however, there are malicious actors trying to play the system.
Andre Daniels, legal manager for tax controversies and litigation at Tax Consulting SA, said this commitment from SARS is part of its goal to make compliance easy for taxpayers.
The group’s latest annual financial report for 2022/23 paid a record R381 billion in refunds, of which R319 billion were VAT refunds, Daniels said.
While the IRS reported high levels of refunds, it also detected a significant spike in suspicious registration by VAT sellers in April this year, necessitating an urgent review of the VAT registration process, according to Tax Consulting SA.
Daniels said it is imperative that SARS ensures it strikes a balance between the ease of registration and the risk of abuse and attempts by individuals to obtain a VAT number and claim fraudulent refunds.
“SARS must tread this razor with the utmost finesse,” the tax advisor said.
The Tax and Customs Administration is now trying to crack down on these fraudulent registrations.
According to SARS’s analysis, a significant number of registrations are deliberately created with the intent to defraud SARS, thus harming honest taxpayers as well as the country’s revenue. As a result, the tax authorities have introduced the following with immediate effect:
All new applications for VAT registration will be subject to a stricter verification process, which may require the applicant to appear in person at the branch closest to the company’s place of business for validation and accreditation. When applicants are expected to visit a branch, the visit must be pre-booked on the SARS website by clicking the “Book an Appointment” icon. All supporting documents required for registration validation must be submitted at the office on the day of the appointment. The VAT registration is not affected until SARS has verified that the request is lawful.
In addressing the VAT problem facing SARS, company commissioner Edward Kieswetter issued a warning threatening to identify and prosecute the perpetrators involved in fraudulent VAT claims, Daniels said.
“Taxpayers would be wise to heed this warning as the Commissioner has indicated on numerous occasions that SARS goes after fraudulent taxpayers, promising to make non-compliance difficult and costly.”
“We have seen this come to fruition as SARS has already turned over non-compliant taxpayers to the National Director of Public Prosecutions,” Daniels said.
According to Tax Consulting SA, SARS takes a “no-nonsense” approach in pursuing non-compliant taxpayers and handing them over for prosecution.
It has become increasingly important for taxpayers to make sure they don’t go into the red regarding SARS.
SARS offers taxpayers the opportunity to clear their names through the Voluntary Disclosure Program (VDP), which taxpayers are encouraged to follow when there are instances of non-compliance unbeknownst to SARS.
Voluntariness is one of the requirements of the Tax Authorities Act, which regulates the VDP.
However, if taxpayers have already come to the attention of SARS through an audit or have received a final demand letter, they cannot use the VDP.
In such cases, a taxpayer may consider tax relief measures outlined in the TAA, including the option of a Compromise of Tax Debt application when a taxpayer has no legal grounds for objection and is struggling to settle their tax debt.
Daniels said: “When a taxpayer is granted an exemption under the VDP or Compromise, fines and/or interest may be waived and the applicant is granted an amnesty from criminal charges.”
“So it is of the utmost importance that taxpayers who have become aware of any non-disclosure or tax omission come forward and apply for exemption through the VDP, or Compromise, if eligible. These mechanisms offer a limited chance of becoming fully compliant and before SARS hits.”
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