Guidance on VDP Process & Taxpayer Detail Update

Guidance on VDP Process & Taxpayer Detail Update

• 03 February 2025
• Tax Administration
• The Tax Faculty Tax Specialist

This article is based on tax law for the year ending 29 February 2025.

Question:

I am handling a case where bookkeeping, annual financial statements (AFS), and SARS submissions have been outstanding since 2007. I am planning to proceed with a Voluntary Disclosure Program (VDP) application and would appreciate your guidance on the process.

1. Should the VDP application be submitted first, or is it advisable to complete all outstanding submissions before applying for the VDP?

2. What is the best way to update an individual taxpayer’s details at SARS, particularly for tax practitioners to receive the OTP and activate the client on our profile? The taxpayer does not have access to the email or cellphone number where the OTP is currently being sent

Answer:

1. The Problem / Facts

• Should the tax practitioner submit all outstanding tax returns before applying for the Voluntary Disclosure Programme (VDP), or apply for the VDP first?
• What is the best way for a tax practitioner to update a client's registered details with SARS when the client is unaware of the registered email or cell phone number linked to the OTP process?

2. Applicable Law

• Voluntary Disclosure Programme: Sections 226–233 of the Tax Administration Act 28 of 2011
• Updating Taxpayer Details for OTP: Section 23 of the Tax Administration Act 28 of 2011

3. Application of the Law to the Facts

Issue 1: Voluntary Disclosure Programme

The recommended approach is as follows:

• Initiate the VDP before submitting backdated tax returns:
  Apply for the VDP first to formally declare the client’s intention to rectify non-compliance dating back to 2007. This ensures SARS acknowledges the voluntary nature of the disclosure and provides relief from potential penalties and interest.

• Why apply for the VDP first?
  SARS generally advises submitting the VDP application before filing outstanding returns. This secures protection under the programme before the tax returns trigger any audits or enforcement actions.

• After VDP acknowledgement:
  Once SARS approves participation in the VDP, submit all required outstanding returns and supporting documents (e.g., AFS, bookkeeping records) to bring the client into compliance.

Issue 2: Updating Individual Taxpayer Details

• A taxpayer can update their registered security contact details by booking a virtual appointment with SARS or visiting a branch in person.
• When visiting a SARS branch, it is advisable to request verification of bank account details. During the same appointment, the taxpayer can update all contact details, specifically requesting an update of their security contact details for OTP purposes.

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