Kindly advise if A Voluntary Disclosure Programme (VDP) can still be done in the following cases: 1. Notification of investigation / review received and investigation finalised. (SARS accepted and refunded amounts on the return and no default picked up). 2. Notification of investigation / review received and investigation and not finalised yet – Risk evaluation in progress. A. If a VDP cannot be done in (2), can a request for correction still be done?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Section 226, of the Tax Administration Act deals with the qualification of person subject to audit or investigation for voluntary disclosure. The relevant subsections reads as follows:
(2) If the person seeking relief has been given notice of the commencement of an audit or criminal investigation into the affairs of the person, which has not been concluded and is related to the disclosed “default”, the disclosure of the “default” is regarded as not being voluntary for purposes of section 227, unless a senior SARS official is of the view, having regard to the circumstances and ambit of the audit or investigation, that—
(a) …
(b) the “default” in respect of which the person has sought relief would not otherwise have been detected during the audit or investigation; and
(c) the application would be in the interest of good management of the tax system and the best use of SARS’ resources.
(3) A person is deemed to have been notified of an audit or criminal investigation, if—
(a) a representative of the person;
(b) an officer, shareholder or member of the person, if the person is a company;
(c) a partner in partnership with the person; (d) a trustee or beneficiary of the person, if the person is a trust; or
(e) a person acting for or on behalf of or as an agent or fiduciary of the person, has been given notice of the audit or investigation.
A request for a reduced assessment is done under section 93(1)(d) of the Act. The two are mutually exclusive in a sense – a readily apparent undisputed error doesn’t involve a behaviour referred to in column 2 of the understatement penalty percentage table in section 223 – see section 227(d).