The Christmas Compromise – Start the New Year on a Clean Slate
With the year fast drawing to a close, and in light of the tax return submission deadline being so graciously extended by the South African Revenue Service (“SARS”), many taxpayers are now stuck between a rock and a hard place, either pay SARS and face the frosty wrath of your loved ones when there is no Christmas cheer to go around, or go on a spending spree over the festive season, and end up on SARS’ naughty list for 2022.
Naughty or Nice – Pay Twice the Price
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, leaving out cookies and milk for Santa is not going to make your problems go away.
What it may however result in, is the imposition of penalties, and accrual of interest, taking what could have been an affordable liability, to double, and sometimes even triple the original liability.
Should this scenario be handled differently, and in following the correct legal strategy, Santa Claus may just visit twice this festive season, with something for your stocking, something for under the tree, and something for SARS, to start the New Year on a Clean Slate.
Coffer or Stocking, the choice is yours, for now
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 to refill its now empty coffers, with aggressive collection steps including salary garnishes, Sheriff callouts and even taking money directly from business and/or personal accounts.
In the early stages, the choice remains yours, your Christmas stocking will be there next year, but the home in which you hang it, may not.
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, so why risk it when you can Compromise it!
A Christmas Compromise
There have been many Christmas miracles over the ages, 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 festive spirit alive.
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, start the New Year on a Clean Slate.
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.
One Saving Grace
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.