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SARS' very rude letter
Tax Bulletin | 13 August, 2009 | Hot Topics:
Dear fellow taxpayer,
If SARS auditors find errors when auditing your income tax, employees’ tax or Vat records, they’ll send you a "letter of findings" to tell you what they’ve found.
Double-check this letter and make sure they’re right – very often they aren’t!
I’ve seen auditors try to put Vat on the sale of employee housing, put fringe benefits tax on cars allocated to call-out staff, and not tax retrenchment pay at the lower average rate a taxpayer’s entitled to. It doesn’t end there. These auditors sometimes try to impose non-existent interest and penalties!
Stand your ground! Here’s what you should do to make sure they don’t walk all over you (and your bank account)
What they’ll say: “You owe interest for late payment. We’re going to calculate this interest from when you should have paid your tax until you actually pay it!”
What you should say: In certain circumstances, SARS must remit any interest charged. If yours is one such case, set it out and push for that remission.
What they’ll say: “We’re imposing the maximum penalty of 10% for your underpayments in Vat, employees’ and provision tax”
What you should say: SARS shouldn’t impose the maximum penalty for the following reasons… (Motivate why they shouldn’t do this. If you can, motivate for no penalty at all.)
What they’ll say: “We can impose 200% additional tax (i.e. Vat at 42% of your sales or income tax at 120% on the disputed income or expense). You must advance reasons why SARS shouldn’t improve the full additional tax.”
What you should say: SARS can only impose additional tax can be imposed if it’s satisfied that I’ve evaded tax or deliberately claimed a refund I’m not entitled to!
In this case, they’re making a serious allegation against you. They must give you their reasons in writing so you can answer these allegations. Ask them to set out their reasons before you attempt to give them an answer!
And the nerve…
Why do I say it is a rude letter? Well, they usually give you seven business days to respond… a time frame I feel is simply unfair and plain rude!
Until next time.
Regards
Peter Franck
Editor in Chief
The Practical Vat Handbook
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Editors note
Fulvia Stoltz
Tax Bulletin Editor
The Tax Bulletin is packed full of tax tips, commentary on changes to the tax landscape and is also an interactive tax forum which aims to help you efficiently manage your taxes and avoid all the traps. It is also a handy reminder of the deadlines which taxpayers have to meet.
