Do I have any recourse if SARS slaps me with penalties, interest and additional tax?
If SARS believes you intentionally under declared your output tax or over claimed your input tax, they will slap you with a hefty additional tax penalty of up to 200% of the tax.
So on top of the normal VAT of 14%, you'll now also need to pay additional VAT of up to 28%, plus a 10% penalty and interest.
You could even be prosecuted in court and can go to jail.
But is there a way out of these penalties?
Read on to find out so you can enforce your rights...
There may be a way out when SARS slaps you with penalties, interest and additional tax
The Practical VAT Handbook says if SARS levies penalties, interest and additional tax, you can make representations to get them to remit or reduce these.
Errors in VAT invoices could cost you thousands!
Are there any inaccuracies in your VAT invoices? You may be charged a very high penalty!
The truth is brutal! Even if it wasn't you who made the mistake, it may be you who will bear the consequences. If SARS has found inaccuracies, you will be assessed, held liable to penalties and interest and possibly even additional tax! You may even be prosecuted!
To be continued here...
But, you can only exercise this right (to request SARS to remit or reduce harsher penalties) if you have legitimate grounds.
Here are four examples of reasons SARS may agree to reduce or remit a 10% penalty:
But what happens if SARS doesn't remit or reduce the interest or penalty? Read on to find out...
If SARS doesn't remit or reduce the interest or penalty, ask for written reasons for their decision
When you have SARS' reasons, make your representations. If you think SARS' reasons are unfair, object and appeal to the Tax Court.
You have a good record with SARS and the mistake was a bona fide error.
You were incorrectly advised by a person who should have known better.
SARS hasn't informed vendors in general about this aspect of the VAT Act.
A big debtor, (a government department, provincial administration, municipality or state enterprise), failed to pay its debt for many months. This put your business in a cash flow squeeze.
The bottom line: You're not totally powerless when it comes to SARS penalties, interest and additional tax. You have a right to ask the taxman to remit or reduce harsh penalties if you have valid reasons.
But since this is a tedious process, the best thing you can do is try and avoid penalties altogether. How can you do this? Declare output tax correctly and get your input tax claims right.
Having a clean VAT audit is easier than you've ever imagined... Click here to find out what SARS looks for.
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