This sentiment is further exacerbated by the warning issued by SARS Commissioner Edward Kieswetter on 13 December 2021, advising that taxpayers with even a single return outstanding, will face penalties being imposed by the revenue authority.
SARS’ Pre-Emptive Strike
Human nature is to place oneself in the most beneficial position. In the circumstances at hand, however, this is not necessarily the best decision for the long run. When confronted with a substantial liability resulting from an assessment by SARS, the revenue authority will pursue collection measures if left unattended.
This includes the imposition of penalties and accrual of interest, taking what could have been an affordable liability, to double, and sometimes even triple, its original value.
What follows is never pleasant. With many taxpayers starting the new year with a Letter of Final Demand (“demand”) in their inbox, however, it must be noted that this demand, having been issued between 15 December 2021 and 15 January 2022, falls within the dies non period, meaning the 10 business days stipulated in the demand, only commence running on 16 January 2022.
The Woes of JanuWorry
The greatest concern for most taxpayers is what collection steps SARS will implement should the final demand remain unsatisfied. Will SARS attach your property? Will the funds in your bank account be siphoned via a 3rd party appointment? These are all very drastic, yet very real measures which SARS utilises on a daily basis.
There are various responses to receiving a final demand from SARS, the most unfavourable of which, especially with the festive season just closing, would be to further finance the settlement of the overdue amount.
Rise of the Machines – AI aiding SARS’ Collections
As evidenced in recent months, and in light of the on-going COVID-19 pandemic, our insight in the market has noted SARS upping its collection power and upgrading its technical prowess, with aggressive collection steps including salary garnishes, Sheriff callouts and even taking money directly from business and/or personal accounts.
It must be noted that now is not the time to take risks. SARS’ approach clearly shows we are dealing with a competent revenue authority, which, with the implementation of AI system improvements, is fast regaining its position as one of the top three revenue authorities in the world.
New Year, New You
There are numerous means by which taxpayers can start the new year on a clean slate, with the most cost efficient of them all being a Compromise of Tax Debt application (“the Compromise”), which is aimed at aiding taxpayers to reduce their tax liability by means of a Compromise Agreement (“the Agreement”) and helping to keep the cash-constrained taxpayer afloat until some financial reprieve is in sight.
Where SARS is approached correctly, a tax debt can be reduced, and the balance paid off in terms of the Compromise, allowing some much-needed breathing room, and helping taxpayers all over the country to become tax compliant.
The effect of entering into a Compromise, greatly reduces the tax liability to an affordable amount while granting a much-needed reprieve, and so aids taxpayers on the road to financial recovery.
Once the Compromise is accepted by SARS, and the agreement duly executed, with payment being made as proposed by the taxpayer, the balance of the liability due to SARS is written-off by the revenue authority.
The First-Mover Advantage
In order to protect yourself from SARS, it remains the best strategy that you always ensure compliance. Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory assistance, to ensure the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally, and we generally find them to be agreeable to the utmost where a correct tax strategy is followed.
As a rule of thumb, any and all correspondence received from SARS should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but the taxpayer will also be correctly advised on the most appropriate solution to ensure their tax compliance.