2023 has seen SARS expanding its compliance arsenal, implementing processes such as the Approval of International Transfer (AIT) process, and sending out waves of Handover to 3rd Party Debt collector Notices to non-compliant taxpayers. We have practically also seen a number of bank collections, as well as garnishee orders and Civil Judgements issued where taxpayers fail to respond to Notices of Final Demand from SARS.
Whilst you may not have kept up to your compliance obligations or current affairs, SARS certainly have! The revenue authority has made it clear that whilst they strive to make compliance “easy and sometimes seamless”, the war on non-compliance is only just beginning.
To defend against SARS’ strategic battle plan, the most heavy-hitting weapons must be understood, as not even local celebrities can evade SARS’ radar forever – here is what you need to know.
Guerilla Warfare
Through the course of the year, we have seen many new innovations being added to SARS’ arsenal, all with the aim of ensuring the revenue authority’s War Chest never runs dry. These new innovations and tactics include, but are not limited to:
Enlisting collection mercenaries - https://www.taxconsulting.co.za/sars-under-pressure-to-collect-what-they-can/
With SARS returning to the outsourcing of historic tax debts, receiving a “Notice of Intention – Handover to External Debt Collectors” should not come as a shock to the indebted South African.
What you should however be aware of, is where no payment attempt is made, SARS WILL make good on their word and hand you over for collection, and potentially prosecution – this is not the laxed SARS many taxpayers are used to!
SMSs and Emails of Demand; SARS Rapid Fire Civil Judgements - https://www.taxconsulting.co.za/sars-quick-to-issue-civil-judgements-on-tax-debts-pay-up-or-face-the-consequences/
As a South African tax resident, one of the scariest situations you can find yourself in is where you have a large tax debt owed to SARS, which you cannot afford – this often results in SARS taking Civil Judgement against you!
You would hope and pray that the revenue authority shows you mercy, and imagine they offer to write-off a portion of your tax debt; well, with the right legal team by your side, this possibility can very quickly become a reality.
Opening fire on Company Registered Representatives - https://www.taxconsulting.co.za/sars-targets-representative-taxpayers-for-company-tax-debts/
SARS are exploiting the Tax Administration Act, which provides for instances in which the representative taxpayer, employer, or vendor will be held personally liable for a company’s tax debt!
Although aggressive with their collections, SARS does, in the Notice of Personal Liability, afford the implicated individual an opportunity to contest their personal liability. This is however not the fire escape it may sound like as proving no personal liability entails what could be construed as an admission on why the taxes were not paid, and what better use the funds were put to.
Monitoring any funds crossing the border (AIT process) - https://www.taxconsulting.co.za/the-market-has-spoken-experienced-hands-needed-to-navigate-sars-enhanced-ait-process/
SARS have, with the purpose of rationalisation and speeding up of the cross-border fund transfer approval process, implemented the Approval of International Transfer system.
SARS further highlighted that the new system specifically aligns with 2 of its strategic objectives, being:
- Making compliance easy, and sometimes seamless for taxpayers wishing to comply; and
- Making non-compliance hard and costly for taxpayers who are unwilling to comply.
The Best Defence is a Good Offense
In order to protect yourself from being the next casualty in the war on non-compliance, it remains the best strategy that you always ensure your tax affairs are kept in order.
Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory. This ensures the necessary steps are taken, protecting yourself and your loved ones from the wrath of SARS. However, where things do go wrong, SARS must be engaged legally, and we generally find them agreeable where a correct tax strategy is followed.
As a rule of thumb, any and all declarations of war received from SARS should be immediately addressed by a qualified tax specialist or tax attorney. Not only will this serve to safeguard you against SARS implementing collection measures, but also being specialists in their own right, you will be correctly advised on the most appropriate solution to commence peace-treaty negotiations.
Written by Jashwin Baijoo, Head of Strategic Engagement and Compliance at Tax Consulting SA.
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