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Do you know the consequences of an anonymous VDP application?

by , 27 June 2014
According to SARS, the purpose of the Voluntary Disclosure Programme (VDP) is to enhance voluntary compliance in the interest of good management of the tax systems and the best use of SARS' resources.

Basically, with a VDP you're encouraged to come forward on a voluntary basis to get your tax affairs in order. Doing this means you could avoid understatement penalties and other administrative penalties.

You can apply for a VDP voluntarily, but there's also an option to apply anonymously.

If you opt for an anonymous application, beware of the following implications.

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Before we get to the implications of an anonymous VDP application, take a look at the requirements you must meet to qualify for voluntary disclosure

The disclosure must:

  • Be voluntary.
  • Involve a 'default' which hasn't previously been disclosed by you or your representative.
  • Be full and complete in all material respects.
  • Involve the potential imposition of an understatement penalty for the 'default'.
  • Not result in a refund due by SARS.
  • Be made in the prescribed form and manner.

You can apply also apply for a VDP anonymously as we've mentioned. In this case, the implications are as follows…

The implications of applying for a VDP anonymously

Experts behind the Practical Tax Loose Leaf Service say a senior SARS official is allowed to issue a non-binding private opinion as to a person's eligibility for relief, if the person provides sufficient information to SARS. Such information doesn't need to include the identity of the party to the 'default.'

ENSafrica, Africa's largest law firm, says the implications of an anonymous application are that you remain at risk of SARS independently identifying any defaults and instituting an investigation in the meantime.

The law firm adds: 'The implication of an anonymous application is, therefore, that the risks of investigation and resulting financial consequences remain until such time as a detailed and named application has been submitted.'

It's that simple. Before you apply for a VDP anonymously, consider the implications we've outlined.

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