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One common record-keeping mistake that'll attract SARS's attention

by , 02 May 2013
Even established companies get caught in the taxman's net. That's why Google in the UK faces further investigation, as its claims don't add up. And you may think you're in the all-clear with SARS keeping your financial records for five years, but there's more to it than that! Read on to find out why five years isn't always long enough to satisfy SARS...

 
Does tax compliance scare you?
 
Then be glad you're not Google in the UK.
 
Because executives from Google Inc and its auditor, Ernst & Young, will again be called before a British parliament committee to testify on taxes.
 
This comes after a Reuters investigation highlighted inconsistencies in the way Google portrays its activities in Britain, says the Thomson Reuters Foundation.
 
The main inconsistency?
 
Google executive Matt Brittin said Google doesn't make sales to UK customers from the UK, while some of its staff and UK customers think Google does.
 
This would have implications for Google's tax status in Britain, opening the possibility of much bigger tax bills, explains the Thomson Reuters Foundation.
 
And you'd find yourself in hot water locally if SARS suspects your business of similar inconsistencies.
 
If so, your business is likely to face a tax audit, says FSP Business.
 
That's why you need to make sure your business' financial records are in order, so that any perceived inconsistencies are easy to explain.
 
Keeping accurate financial records is the easiest way to clear up any inconsistencies with SARS
 
Especially as you'll need to back up that all your business tax return calculations have been done correctly and that you're not seen as a tax evader by making sure every calculation is recorded, says FSP Business.
 
But there's a common record-keeping mistake to avoid, says The Practical Tax Loose Leaf.
 
See, many businesses only keep their financial records for five years from the date of their financial year end.
 
Instead, you must keep records for five years from the date of submission of your tax returns, which could be up to a year after your financial year-end.
 
Added to this, SARS has a 15 year prescription period, so if you have any doubt whatsoever, don't shred your records.
 
SARS paid out your refund? You still need to keep your financial records!
 
Even when you think you're in the all-clear as SARS has performed an audit or paid you your refund as SARS could still ask more questions in future, explains The Practical Tax Loose Leaf
 
If you've only been keeping your financial records for five years from your financial year end, best you make this quick change to ensure you stay out of trouble with SARS!
 

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