A SARS audit can be an expensive and traumatic experience if you don't understand what's required of you and why SARS has to audit your company…
So don't be caught off guard.
Here's what you need to know to help ease your anxiety regarding a SARS audit.
Remember these five points about a SARS audit
#1: SARS'll audit your company if it feels it needs more information or if you're withholding something.
'It does this to detect and deter non-compliant behaviour and risk profiling forms part of the SARS audit system,' says The Practical Tax Loose Leaf Service. This means it focuses audit work on areas within your affairs that present the highest risk and uses risk analysis to measure the extent to which your company may not be complying with tax legislation.
#2: Although SARS has every right to audit your company, this doesn't mean they can knock your door down. You still have rights. They must give you reasonable notice, generally 21 days or ten days in the case of a field audit or criminal investigation;
#3: You can and must, refuse to comply if SARS doesn't have the correct documentation to conduct its audit. This means they must provide you with a search and seizure warrant.
Make sure to check that the search and seizure warrant has the following:
Remember to also check the date on the warrant. Make sure it's within 45 business days of issuance of the warrant unless otherwise stated on the warrant. If a warrant hasn't been issued, the SARS official must explain the reasons for the search, explains FSP Business.
#4: Request that SARS give you notice or any follow-queries in writing. You must keep these records for three to five years.
#5: Be warned: If your financials suddenly change drastically, you WILL pop up on SARS' radar screen.
For example, if SARS notices a sudden drop in your gross profit it could conduct an audit on you because it believes there's a chance you're skimming cash off your top-line to reduce gross profit and pay less tax.
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