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Six ways SARS will target your business for a tax audit

by , 05 August 2014
You can't escape or prevent a SARS tax audit. In fact, the chances of SARS NOT auditing your business are slim to none.

But how does SARS go about selecting its targets?

SARS actually has several ways of selecting targets and, because of this, it's impossible to predict if and when SARS may pounce on your business.

It's a good idea, however, to ensure you know how and why SARS selected your business so you can challenge it if you need to...

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Here are the six ways SARS selects its tax audit targets

1. Random selection
This, as the name suggests, is a random luck of the draw selection process. Basically SARS will audit every case on its files in a given period.
2. Specific referral by other sections within SARS
Other sections within SARS, such as those below, can refer you to SARS audit department:
- The transfer duties department;
- Assessments department;
- Vat department;
- PAYE department; or
- Other revenue offices that have dealings with you.
3. Specific referral by the general public
This referral comes from information that members of the public give to SARS like tip-offs, whistle-blowers, disgruntled employees or even ex-lovers.
4. Discretionary selection
The SARS manager can select tax audit targets at his discretion.
5. Computer-generated selection using the Visit Indicator Point System
SARS usually uses this method to select Vat vendors for audit. It uses a scientific selection process that takes into account the specific risks each vendor has.
6. Refund audit
SARS does refund audits to investigate and ensure any refunds it processes are valid and accurate.
Method two to six are risk assessment selection methods and that means you can do something about them. So ensure you know why and how SARS selected you for an audit so you can defend your rights if you need to.
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