SARS, NPA to prosecute taxpayers for outstanding returns
PRETORIA, 16 April 2018 – The South African Revenue Service (SARS) has embarked on a new initiative with the National Prosecuting Authority (NPA) to prosecute non-compliant taxpayers, including prominent South Africans, who have failed to submit returns.
Taxpayers who are found guilty will end up with a criminal record.
The initiative has already seen its first conviction in Port Shepstone last week. Mr S Ragunat, as the representative of SPS Distributors, paid an admission of guilt fine of R5 600 in the Port Shepstone Regional Court for non-submission of more than 50 outstanding Value-Added Tax (VAT), Pay-As-You-Earn, (PAYE) and Corporate Income Tax (CIT) returns. He was ordered to and has submitted all the outstanding returns.
Failure to submit a tax or VAT return is a criminal offence in terms of the Tax Administration Act and Value-Added Tax legislation.
During the week of 16 to 20 April, eight outstanding return cases involving hundreds of outstanding returns will appear on court rolls in different parts of the country – including four cases in the Johannesburg Magistrate’s Court on 19 and 20 April.
There will also be cases in Ficksburg and Bothaville in the Free State, as well as the Newcastle Magistrate’s Court in KwaZulu-Natal during the rest of the week.
The campaign marks an intensification of SARS’s Outstanding Returns Project that was launched towards the end of last year when SARS aimed to raise awareness amongst taxpayers about outstanding tax returns.
SARS has over the past few years experienced an unacceptable increase in the non-submission of returns across all tax types, including PAYE, VAT, corporate income and personal income tax.
At the end of March 2018, SARS’s Outstanding Returns Book showed that active taxpayers owed SARS approximately 30 million returns, in many cases showing that multiple outstanding returns were due by a single taxpayer.
The decision to resort to enforcement of compliance through criminal prosecution is a last resort. All the taxpayers that will appear in court were engaged beforehand and final demands were issued them before the criminal cases commenced. At this stage 36 dockets have been handed over to the NPA.
The significant drop in the submission of returns was one of the key indicators pointing to decreased compliance and was highlighted by Finance Minister Nhlanhla Nene during the announcement of the tax revenue collection figures for the 2017/2018 financial year.
Every year, SARS announces its tax season – a period during which you are required to submit your annual income tax return. This year, it opened for individuals on the 1st of July and they have until the 27th of November to file their tax returns.
Who should file?
SARS says that if your total salary between 1 March 2016 and 29 February 2017 is not more than R350 000, you need not file. Provided, however, that you only have one employer. If you have two employers or two income sources e.g. rental income, late spouse income, you will need to file — even if the total is still under R350 000.
Notwithstanding this SARS recommendation, some tax practitioners strongly recommend that you file anyway.
Tax practitioner, Wiaan Pieters, told HuffPost SA: “Rather submit your tax returns, even if you earn way less than R350 000. You never know if you are in breach of a SARS condition and if you are unsure, just submit. Better safe than sorry.”
That’s because “tax can be simple until there’s a complication,” added Jacque Sourie, Director at FMJ Financial Services.
And if I haven’t filed, what happens?
If you don’t submit your tax returns at all, or on time, you may be liable for penalties. “And they will just get bigger and bigger the more you delay,” cautions Pieters.
How much are the penalties?
In Sourie’s experience, most penalties are in the range of R250 to R2 000 per month per return. However, it can reach R16 000 per month if you earn in the millions per annum, he says. The penalty can be applicable for each month a return is outstanding.
So what can I do?
Sourie advises that one speaks to a tax practitioner immediately.
“Or speak to SARS because you can make an arrangement to pay,” adds tax practitioner at Smart Tax, Michelle Kruger.
Unfortunately, points out Sourie, “SARS most likely won’t remove your penalty where a return should have been submitted and wasn’t submitted on time.”
Further, “have all your supporting documents ready, and please submit as honestly as possible,” advises Kruger. Otherwise, you may risk further penalties.
It is also worth noting that SARS not only charges a penalty for non-submission or late submission of your income tax return, but there are also penalties if you have failed to register as a taxpayer when you should have.
And if you just completely ignore this?
“It’s a huge error,” said Pieters. SARS can appoint an agent such as your bank and instruct them to deduct whatever is owed to them. They can also obtain an order of the court and ask an employer to deduct a certain amount from the taxpayer’s salary until all the penalties are paid.
If you need assistance, you can call the SARS Contact Centre on 0800 00 7277 or visit your nearest SARS branch. You can also seek the services of a registered tax practitioner or company.
*This article is specific to individual tax payers.