In a significant move towards strengthening VAT compliance, the South African Revenue Service (SARS) announced in December 2023 its intent to rigorously enforce the provisions of section 95(1)(c) of the Tax Administration Act, 2011 (TAA). This measure targets instances where vendors neglect to submit requested materials, leading to the imposition of estimated assessments.
The Process of SARS Verification and Its Implications
During the verification process, SARS may issue a "Request for relevant material" via e-filing following the submission of the VAT201 return. If a vendor fails to comply with this request within the stipulated 21 business days, SARS is authorized to issue an estimated assessment for the corresponding tax period.
It's crucial to note that while vendors can apply for a “Request for suspension of payment” alongside compelling arguments to defer such payment, the option to submit a “Request for Correction” against the estimated assessment is unavailable if there is disagreement with SARS' estimation. Furthermore, SARS maintains that these estimated assessments are not subject to the standard dispute resolution procedures outlined in the TAA.
Responsibilities Following an Estimated Assessment
Upon receiving an estimated assessment notice through e-filing, the vendor is obligated to provide the initially requested material within 40 business days from the assessment date. In cases where compliance within this timeframe is challenging, vendors may submit a “Request for extension” to SARS, outlining the valid reasons for delay.
The Risks of Non-Compliance: Penalties and Interest
Non-compliance carries financial implications; administrative penalties and interest are levied when VAT is owed to SARS. Therefore, maintaining rigorous VAT compliance and promptly responding to SARS' requests is essential to avoid the risk of estimated assessments.
Professional Assistance for Compliance
For businesses seeking to ensure full compliance and effective handling of verification requests, VATIT SA offers expert services. Our team is dedicated to assisting your business in meeting all SARS requirements efficiently and on time, safeguarding against the complications of non-compliance.