There are several risks your company might face that could end up with SARS suspecting you of fraud.
If this is the case, SARS can revise its tax assessments and look for evidence for fraud, misrepresentation and many others in your records.
To protect your company, you need to know the regulations and place yourself at no risk when it comes to an audit from SARS.
Let's see some regulations when it comes to SARS performing an audit:
1. SARS has three years to impose a revised assessment
According to our laws, SARS has three years after an audit or assessment in which to issue you with a revised assessment. However, if SARS finds evidence of fraud, misrepresentation or non-disclosure of material facts, the three year prescription falls away. SARS can then revise assessments all the way back to your birth date, without any limitation.
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2. Three requirements that must be met BEFORE SARS can impose anti-avoidance measures against you
Keep in mind that if SARS finds that you're guilty of illegal tax evasion or fraud, or of deliberately postponing or deferring your taxes, then it can impose the anti-avoidance measures (Section 80A).
To do this, SARS must prove:
• That the effect of your transaction, scheme or operation is to avoid an anticipated tax liability.
• That your transaction or scheme doesn't have a reasonable business purpose and isn't normally applied in business. In other words, it's funny business!
• That your sole intention was to obtain a tax benefit that you're not entitled to. When you're faced with two courses of action in your tax dealings, it's not always wrong for you to go for the one that results in a smaller tax bill. But if it's a deliberate attempt to dodge tax, then you're guilty.
SARS will look out for sham transactions (contracts between you and a client or an employee, for example, that disguise the true intention of the transaction to avoid taxes illegally)
3. The onus of proof is on you
In case SARS finds evidence of tax evasion, it can cite Section 103(4) of the Income Tax Act, and presume you guilty until YOU can prove otherwise. That's right, the onus of proof will fall to you.
Note that if SARS raises an assessment against you, you'll have only 30 days to lodge an objection. If you fail to do this, you'll be liable for the penalties and interest.