Dealing with SARS Income Tax and VAT Audits
Presenters : Johan Heydenrych
Overview
In the 2023 Budget Speech, the Minister of Finance, Mr Enoch Godongwana stated that “…our country is reaping the benefits of a more efficient and effective tax administration, that is building trust to increase voluntary compliance and boost revenue collections.”
The 2023/2024 Budget elaborates on the South African Revenue Service (SARS) renewal process as follows: “SARS celebrated its 25th anniversary in October 2022. SARS continues to enhance its service offering as it rebuilds from the period of state capture. Over the past three years it has strengthened revenue collection and worked to ensure that its systems, officials and leadership are capacitated to improve the taxpayer’s experience, increase compliance and generate additional tax revenue.”
Since the IT 14SD was decommissioned in the latter part of 2022, there has been a significant increase in requests for information (RFI) and formal SARS audits. Where errors are suspected, additional assessments are raised together with significant penalties.
The tax practitioner and the tax executive has an obligation towards our clients and our employers to ensure that SARS audits and RFI’s are dealt with effectively and efficiently whilst minimising the risk of revised assessments and eliminating the risk of understatement penalties charged by SARS.
Video content
The video cover the following four main sections:
We will firstly explore certain high-profile SCA and High Court cases and consider whether or not a different approach by the taxpayer in dealing with the SARS RFI and the SARS audit could have avoided the cases being referred to the court in the first instance. Cases dealing with understatement penalties, prepayments, stock valuations and Section 24C will be discussed.
During section two, we will consider how a precautionary and anticipatory approach to ITR 14 and VAT 201 preparation can avoid costly disputes with SARS and minimise the risks of understatement penalties. We will discuss sound principles of tax risk management and tax governance that, if applied properly, can protect the taxpayer against most understatement penalties.
Next, we will deal with practical case studies where a strategy for dealing with SARS audits under different scenarios will be discussed in a practical and understandable manner. Participants will benefit from the practical experience built up over 30 years by the presenter in dealing with SARS audits. This is more than “knowing your rights”. This section is about the subjective decisions to be made by the person dealing with SARS audits under a variety of scenarios.
During the final section, we will deal with the future of tax audits with specific reference to increased data analytical capabilities of SARS and reliance on third party data submissions.
Competencies developed in this video
- Know your rights in terms of the Tax Administration Act (TAA) in so far as dealing with SARS RFI’s and audits are concerned.
- Take a pro-active approach through adoption of basic tax risk management procedures by anticipating standard RFI’s.
- Develop a strategy for responding to RFI’s and SARS audits.
- Be able to prepare a well-worded response to a SARS RFI and audits that is free of ambiguity and will assist SARS to apply its mind as to whether or not you have complied with the law.