2023 has gone by in a blur, and Christmas is just around the corner; business has started winding down for the year, but NOT SARS’ collection drive!
Jashwin Baijoo
Partner and Head of Strategic Engagement and Compliance
Admitted Attorney, LLB, LLM (Tax)
Objectively, taxpayers are not the fondest of forking out for a large tax bill every year, least of all in the build-up to the festive season. With your mind on Christmas cheer and family dinner’s, looking forward to some much needed time-off, the last thing you need is SARS draining your bank balance on Christmas Eve!
As much as your tax debt may be the last item on your Christmas list, it’s the first item on SARS’ naughty list; ignoring your dues to SARS may give you some December spending, but is certainly not the best financial decision in the long run. Where the debt is large, the consequences can be dire!
Most taxpayers don’t believe they are on SARS’ radar. In the mind of the general populus, SARS is seen to go after large tax debt offenders, but in reality, the target mark has extended to the average taxpayer – aka, “the low hanging fruit”.
With data driven insights being more prevalent than ever before, be it a basic salaried employee, or High Wealth Individual with a plethora of offshore assets, SARS knows your every move! As much as you may disclose what you deem within SARS’ purview, the data captured from third parties trumps this, and is then used to calculate your actual tax due. A taxpayer who has chosen to hide their gifts from SARS, will be placed on their naughty list and forced to face SARS’ classic go-to punishment – interest and penalties.
But it gets worse, should you find yourself on the Grinch’s naughty list, it starts with a single phone call, followed by a Letter of Final Demand, until it gets closer, and closer, breathing down your neck at every twist and turn, until you hear that final, detrimental, knock on your door.
Taxpayers truly fail to realise that SARS can commence third-party collections at any stage after the timeframe stipulated as lapsed, this could mean that bonus you have worked this entire year for, could be taken from your bank account, or worse still, the Sheriff of the Court seizing your Sleigh!
There are a few of Santa’s secrets that SARS doesn’t tell you when it comes to resolving your tax debt and obtaining compliance.
A taxpayer should always strive for tax compliance, be it a matter of prudence, or a New Year’s Resolution. However, where a taxpayer has failed to do so, the next bell it jingles should be that of a Tax Specialist or Tax Attorney, to ensure the appropriate tax strategy is followed in engaging SARS!
Santa can fly across the world and deliver all his presents in one night, the same way the astute Tax Attorney can put a stopper on SARS’ collection of your tax debt, in one legal application! This application will act as a “stopper” when submitted to SARS and it aims to temporarily suspend any collection measures whilst the taxpayer manages its’ tax affairs. It should however be noted that the most prudent approach remains to ensure full compliance, including settlement of your tax debt. However, where unaffordable, SARS may just become your Secret Santa, with either a Compromise of Tax Debt or Deferral of Payment request!
If the taxpayer pulls this Christmas cracker and is successful, it will help aid the taxpayer 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.
Here is your opportunity to be financially sound, as the SARS will be out to not only fill the fiscal pothole, but also their own stockings; simply downing the eggnog will not make your outstanding tax debt go away!
To protect yourself from a gloomy Christmas, and unpropitious New Year, it remains the best strategy to ensure compliance. Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your festive spirit from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally.
As a rule of thumb, all correspondence received from SARS should be immediately addressed by a qualified tax specialist or tax attorney, which will serve to safeguard taxpayers against SARS implementing collection measures. Being specialists in their own right, taxpayers will be correctly advised on the most appropriate solution to ensure tax compliance.
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