Your receptionist interrupts you in the middle of an important board meeting. She tells you SARS auditors are here for a Vat audit!
The first thought that comes to mind is, 'can SARS just pitch up unannounced for a Vat audit?'
This was the same question Tim asked us on the Accounting and Tax Club.
He didn't know if he should fight the surprise SARS inspection but look guilty of being dishonest. Or, let SARS in, but possibly let it abuse its rights!
And worse still, he was in a meeting with potential funders for his business. A surprise visit from SARS was the last thing he needed when looking for investors!
If this happened to you, would you know what your rights are?
Keep reading to find out if SARS can just pitch up at your office and what you can do to protect yourself!
Can SARS just pitch up at your business?
Unfortunately, the answer is yes!
SARS may carry out two types of inspections. These are an inspection with notification
(which you're aware of) or an inspection without notification (the Tax Administration Act).
So yes, SARS may arrive at your business and inspect it without even notifying you.
It typically uses these inspections for tax base broadening or verification purposes. For example, to confirm your enterprise exists, when it does checks for Vat registration.
But SARS has rules it must abide by when it comes for a surprise Vat audit.
Three rules SARS must follow for inspections without notification
1. SARS can only conduct the inspection for purposes of the administration of a tax act. And as Vat is a tax act, SARS can visit to check your company's Vat compliance;
2. SARS can arrive without prior notice; and
3. Before entering, the SARS official must have a reasonable belief that a trade or enterprise is being carried on. For example signs at the entrance; clients coming & going; third party information etc.
But, just because SARS pitches up, it doesn't mean the surprise visit is valid, read on to find out when it is…
Three instances when SARS' surprise visits are valid
**********Recommended for you
Ace your Vat audit!
Rest assured that your Vat affairs are 100% in order, and you'll ace the audit!
From registration, to assessments, to exports, and zero-rating, the Practical Vat Loose Leaf
is every vendor's best friend!
Follow this link to get your hands on your copy and save 25% now…
Surprise visits are only valid when SARS does the inspection to find out:
· The identity of the person occupying the premises (i.e. your company);
· If you're registered for Vat; or
· If the person keeping your records, is doing so in the required format.
SARS can't pitch up at your house – it can only pitch up at your business. This is unless you've given the auditor permission to enter your house. Or if he enters the part of the house you use for your business.
Remember, only a SARS official who's authorised to conduct an audit may do so – and not merely anyone who works at SARS! When they arrive, ask them for their ID. If they can't produce a SARS ID card, you have the right not to let them check anything (section 41(3),TAA).
There you have it. Now that you know what your rights are when SARS pitches up for a surprise audit, find out how to survive the Vat audit.
If SARS audits you and sees you're not compliant, it can extend its audit to other areas of your tax compliance. Here's all the information you need to know on how to survive a SARS tax audit…