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What can SARS do when if the suspect your company of tax evasion?

by , 07 March 2013
India's tax authorities are considering slapping criminal charges against Cadbury's Indian division for allegedly furnishing false documents and pretending to make chocolates in a non-existent factory to avoid paying excise duty, reports FSP Business. It's been dubbed 'blatant tax evasion' by tax authorities and could lead to massive fines for the group if proven guilty. While your company may not knowingly be involved in tax evasion practices, if SARS suspects there's something fishy with your books it could do a surprise raid on your business to check. Here's what to expect if this happens...

"Currently SARS is empowered by legislation to give you a 200% penalty on any tax amount that you evaded, and if that is already unbelievable, you get to pay the interest from due date to the date of payment too. You can also go to prison,' reports needanaccountant.co.za.

And if it suspects your company of tax evasion, it can drop by anytime – and unannounced – to raid you.

SARS has the power to conduct search and seizures if it suspects tax evasion

Under the Tax Administration Act (TAA), 'SARS has extensive power to conduct a search of premises and seize documents, books of account and records,' explains the Practical Tax Loose Leaf.

If it suspects your business of tax evasion, here's what you can expect to happen.

During search and seizures, a SARS official can do the following:

According to the Practical Tax Loose Leaf, while conducting a raid, a SARS official may:

1. Open or remove anything that the official suspects to contain relevant material;
2. Seize any relevant material;
3. Seize and retain a computer or storage device in which relevant material is stored, for as long as it is necessary to copy the material required;
4. Make extracts from, or copies of, relevant material and require from a person an explanation of relevant material; and
5. If the premises listed in the warrant is a vessel, aircraft or vehicle it can:
  • Board the vessel, aircraft or vehicle;
  • Search the vessel, aircraft or vehicle or person found in the vessel, aircraft or vehicle; and
  • Question the person with respect to a matter dealt with in the TAA.

This aside, it's important to remember that a SARS official can't enter your home or domestic premises without your consent, unless you use a part of your home for business purposes. In that case, you must let them into that part of the house.

Just remember, in most cases, SARS can only conduct a search and seizure raid with a warrant issued by a judge of the High Court or a magistrate in smaller tax evasion cases. If you're confronted with a SARS official at your office, demand to see it. By doing this, you'll know whether or not the raid can legally be carried out and what your rights as the business owner are.

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