There has been a warning to taxpayers who fail to provide pertinent documentation in a timely manner to support their value-added tax (Vat) filings. Effective immediately, the South African Revenue Service (SARS) will start providing estimated assessments.
After the estimated assessment is released, the Vat vendor will not be able to file a request for adjustment for the same period. Typically, a Vat seller has five years to make a request.
Since the 2011 adoption of the Tax Administration Act (TAA), SARS has been authorized to do this. It’s clear that SARS lacked the capability to do so even though it had the legal authority to. It does now.
The Procedure
Vendors that object to the projected assessment have forty business days from the date of the notice to provide their supporting documentation.
If the taxpayer is unable to submit the documentation within the time limit, they may request an extension, but only under specified conditions.
Vat sellers are recommended to request a suspension of payment since the expected assessment may result in a tax liability.
A taxpayer usually has 21 days from the time they file their return and get a verification notice to file the additional paperwork. The projected assessment will be sent by SARS automatically when that deadline is missed. In the event that no additional extension is granted, the second deadline is 40 business days.
Appeals and Objections
Though a request for rectification is not possible once an estimated assessment has been issued, SARS correctly points out that the taxpayer has a second chance by requesting a lower assessment within 40 days.
If SARS refuses the request, the taxpayer may object and appeal the estimated assessment.
The notification from SARS is deceptive. It adds that the vendor will be unable to submit a notice of complaint since an estimated assessment made under the TAA is not susceptible to dispute. That is incorrect.
If the necessary information is not given, SARS may provide an approximated evaluation. However, the legislation simply stipulates that the assessment is not open to dispute or appeal if SARS and the taxpayer agree in writing on the amount owed.
Should the vendor produce the supporting documentation but SARS does not change the assessment, the taxpayer has the right to object. SARS’ communication is not clear.
Timelines
If SARS is unable to get the necessary information, they may offer an estimated assessment. However, the act stipulates that an assessment will not be susceptible to dispute or appeal if SARS and the taxpayer agree in writing on the amount owed.
It is especially critical to keep track of deadlines during this time of year, as the 40 business days typically omit mid-December to mid-January. This does not imply that taxpayers should consider it a “safe period”. It is critical to keep a watch on any e-Filing alerts.
Compliance
Both taxpayers’ and SARS’ interests are balanced by the newly operative laws. SARS has chosen to enforce the estimated assessment procedure despite the fact that it has been in place for a while since taxpayers are not promptly responding to information requests.
This is a component of SARS’ broader campaign of compliance enforcement.
They may avoid a lengthy process of requests for reduced assessments, objections, and appeals by just providing the relevant information at the outset.
The inability to comply with submission deadlines and the delayed delivery of verification materials is a major source of aggravation for them. SARS wants the ability to handle a tax situation, bring it to a close in a timely manner, and then move on.
