A taxpayer has a backlog of returns with SARS. The taxpayer’s main business is catering services. Unfortunately, the taxpayer does not have any receipts for expenses incurred in relation to the provision of those services. As receipts came in, cash was wi
Author: Peter Surtees
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
I’m afraid the taxpayer is about to learn an expensive lesson. SARS is likely to take the totals of till slips and treat them as gross income. Your challenge will be to justify expenses. Phone accounts, rent, wages (I hope the client maintained accurate PAYE/UIF/SDL records), payments to suppliers by cheque or EFT, and any debits on bank statements that you can identify as business expenses, should be able to give you some basis for claiming deductions. If the taxpayer was, as seems to be the case based on your description, drawing takings from the till and using them to pay expenses, then you have a problem. All I can suggest is that you do the best you can to reconstruct financial statements for the years of assessment in question. File the returns and hope that SARS doesn’t ask for supporting documents. If they do want supporting documents, you may have to request an agreement for estimated assessments under section 95 of the Tax Administration Act, or seek a compromise as contemplated in Part A of Chapter 14 of the TAA.