Will you receive a tax compromise? Ask yourself these 4 questions to find out
If your company is struggling with tax debt, it doesn't have to be as bad as it seems. You have a lifeline.
It's called a tax compromise.
It's an option you can take if you can't afford to pay SARS an outstanding tax debt.
The fact of the matter is, SARS would much rather consider compromising on outstanding tax debt than shut you down or sequestrate you, which could result in them not getting any future tax out of you. You can submit an application for a tax compromise at any time of the year, and should be done as soon as you realise you can't pay SARS any outstanding tax debt.
But, how do you know if your application will be successful?
Simply ask yourself these 4 questions... And if the answers to them is 'no', then your application stands a very good chance of SARS agreeing to your compromise.
Will SARS get more tax back from you by continuously demanding it or by taking it out of your bank account?
Can SARS recover the outstanding debt from any debtors, business owners, trustees or shareholders?
Will SARS get more money in the courts as opposed to a compromise? Also, will they get more money if they sequestrate or liquidate you?
Will compromising result in tax debt taking longer to be recovered by SARS, as opposed to any other available means? In other words, are there any other viable options to recover the outstanding tax debt, apart from a tax compromise?
At the end of the day, SARS wants to ensure that they'll receive the highest net return on any outstanding tax debt. This basically means they want to get as much money as possible, into its bank account. And if the compromise is that answer, then SARS will accept your application.
*If you want to learn more about tax compromises, then subscribe to the Practical Tax Loose Leaf Service.