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Seven instances when SARS will reject your tax compromise application

by , 24 December 2014
If your business is battling with tax debt and can't pay SARS, a tax compromise is your lifeline.

It's basically a request to SARS asking it to 'park' any outstanding tax debt.
By parking the debt, SARS will agree not to demand payment. It treats the debt as no longer due and payable.

If you want to use a tax compromise to your advantage, you need to know that SARS is very strict. It won't just grant it. After all, you're asking for it to stop wanting its money from you.

So before you start a tax compromise application, it's important to note when SARS won't even look at your application. This way, you can weigh up your chances of success and not waste yours and SARS' time.

Read on to discover the seven instances when SARS will reject your tax compromise application.


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SARS will reject your tax compromise in these seven instances

 
1. You made an application for a tax compromise three years ago and were successful;
 
2. Your tax affairs aren't up to date;
 
3. Another creditor is already sequestrating or liquidating you;
 
4. The tax compromise could prejudice other creditors (unless the creditors consent to the compromise);
 
5. The compromise could benefit other creditors relative to SARS;
 
6. The tax compromise could affect a broad range of taxpayer compliance;
 
For example, the last time you gave SARS a return was in 1984. You then ask for a tax compromise. If SARS shows leniency to you, all other compliant taxpayers could stop submitting their returns because SARS will just compromise the tax debt;
 
7. Your business is a Trust or a company, and SARS hasn't tried to recover the tax debt from the personal assets of anyone who's possibly. For example, trustees, shareholders, third parties etc.
 
Knowing about the seven instances when SARS will reject a tax compromise will help you weigh up your chances of success.
 
PS: For more information on a tax compromise, check out the Practical Tax Loose Leaf Service.


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