Get the facts!
An unfounded fear is often exactly that, UNFOUNDED. In business, as in life, it is always better to get all the facts before acting. This is especially true when it comes to the “dreaded tax man”
Most people do not like SARS (South African Revenue Services). As an tax and accounting practice that deals with SARS regularly, we can understand how this comes about. Having said that, most fears around SARS and tax are unfounded.
Know the process
These are disproved by more information and knowledge about the whole process. Basically, it comes down to a lack of communication between the parties. Most from the taxpayers’ side, actually.
In terms of communication and overreactions, it is imperative that the taxpayer and the tax practitioner hear each other about what the process is. SARS does not request every slip of paper immediately. If they require more information they will request it. If that is still not enough, they WILL request more.
Can I have an example of this process?
A taxpayer sends all the documents required to complete the tax return to the tax practitioner (TP). The TP completes and submits the return. SARS will respond in one of two ways:
- Select the return for a verification process
- If they agree with or are “happy” with the return, it is closed and a letter of completion is sent. The refund or payment is then due within the specific time period per SARS instructions.
In the case of a verification, SARS will immediately communicate with the TP to submit the supporting documents for the return. This is where the unfounded fear goes from zero to a hundred miles an hour in a split second. This is only for the taxpayer though. The TP does not have this fear because he (she) understands the process. A verification is purely SARS saying “let’s have a chat about what you submitted”. If they are not satisfied, they will select the return for an audit.
“A Taxpayer and taxpayer should only fear SARS if they have something to hide” Bruce Laister (SARS tax practitioner)
Still no fear in nothing to hide
An audit requires the second level of information to be sent. This is when SARS requests more information. This is when the TP will send more detailed descriptions or all the “slips” to SARS. The TP will still not have any fear because it is just providing more information on the specific items in the tax return. Simple put, if the slips total the amount on the summary and the return, SARS will close the return and a letter of completion is sent.
Still not satisfied?
If there is still something amiss, SARS will adjust the assessment of the tax return accordingly. This is achieved by reducing the refund or increasing the amount payable. The TP or taxpayer can still question the decision but it becomes more intense in depth because you have to do it through a process of a dispute.
As a TP, we make sure that at each level the required documents are submitted. There is no need to submit everything at once because it wastes time.
Where does this unfounded fear come from?
Many times, a client receives a phone call or message from SARS and reacts. This reaction involves placing their fear on the TP and possibly even doubting whether the return was done correctly. This is understandable but not the correct reaction.
As a TP we are regulated by the law on how and what we do for tax clients. Some clients will get the correspondence from SARS before the TP so when that email arrives. Because of this, the TP is in the dark.
In conclusion, get the facts about what is going on from your TP because there is a logical and reasonable explanation for what is going on.
For more information about tax returns, read more here
This article was updated in October 2021
for more information on this process, please visit sars.gov.za