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Revealed: Four tips you can use to avoid triggering a SARS audit

by , 20 June 2013
Italian fashion designers Domenico Dolce and Stefano Gabbana, the names behind the fashion label Dolce and Gabbana, are convicted tax evaders. This after the stylish pair was sentenced to 20 months in jail for failing to declare €1 billion in income, The Guardian reports. The investigation, which came to a conclusion yesterday, began around six years ago as part of the Italian government's plan to root out tax avoidance. If you think this has nothing to do with you company, think again. SARS is cracking down on tax evaders and your company could be next in line. Here are four tips you can use to help ensure you're on the right side of SARS...

At a hearing yesterday, the judge ruled that the designers had moved their brand to a Luxembourg-based holding company Gado in 2004 to avoid declaring their taxes, the BBC reports.

Dolce and Gabbana are the second high profile personalities fingered for tax evasion in just a matter of days.

Last week, shocking media reports emerged that Football maestro Lionel Messi and his father engaged in tax fraud worth more than $5million. According to the prosecutor's complaint, the pair intended to 'deceive the taxman by ceding Messi's image rights to companies based in tax havens such as Belize and Uruguay.

If you think, it's just high profile personalities being investigated for tax evasion, you need to rethink that.

SARS is tightening its grip on local tax evaders as well.

SARS is targeting tax evasion and your company could be in its sights

In fact, SARS is uses risk profiling to focus 'audit work on areas within your affairs that present the highest risk and uses risk analysis to measure the extent to which you may not be complying with tax legislation,' explains The Practical Tax Loose Leaf Service.

While all businesses will be audited by the SARS at least once in their lifetimes and chances of avoiding detection or notice are almost non-existent, there are ways you can use to avoid triggering an audit through certain transgressions.

Here's how to ensure your company's affairs are in order, so you won't be audited because SARS suspects wrong doing on your part…

Use these four tips to avoid triggering an audit…

Tip #1: Make sure you can prove why you have a drop in profits. If you can't, SARS will audit you to make sure you're not skimming cash off your top line to reduce the amount of tax you pay.

Tip #2: Don't launder money. SARS is always on the lookout for tax evasion and avoidance schemes. So make sure you record and account for legitimate business expenses correctly and keep your supporting documentation filed.

Tip #3: If you pick up on an error on your tax payment voluntarily disclose it and rectify the payment. If you don't, a SARS official will audit you and you'll be liable for more tax in terms of penalties.

Tip #4: Make sure your Vat claims add up. If they don't, SARS will conduct a field audit. A field audit will be conducted at your company's premises to closely monitor and audit all your various tax processes.

Just keep in mind that a field audit is a red flag, as they're only indicated for taxpayers who are deemed to be medium to high risk.

Follow these tips and you'll be able to rest assured knowing your company won't trigger a SARS audit.

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