Let Us Handle Your Audits

So, if you are reading this, it probably means that you need help urgently with regards to your tax. It has become the SARS practice to audit most cases where there are large claims against income. (Even when there are only a few claims against income, we have seen a sharp increase in audit cases)

The obvious reason for SARS audits is to check if things are done correctly and to verify the validity of the claim and the amount of the claim. If they are not happy, they will simply disallow a claim and issue an assessment.

Speak to a tax practitioner

The problem with this is where SARS makes an adjustment to an assessment, they may automatically consider imposing an understatement penalty of between 50% and 200% and generally applies the 50% penalty.

For example, if there is a tax benefit of R10 000 which is disallowed, SARS will reverse the R10 000 tax benefit and add an additional R5000 – R20 000 for an error or perceived error made. (Section 222 and 223 of the tax administration act)

The above is not to say that SARS will impose a penalty but they have the right to impose the penalty and in many cases, we have noticed that they impose the penalty but in many other cases, we have not seen the imposition of this penalty. We suspect that this is the next area where SARS will get strict due to the simple reason of it is their right to do so.

Once you have this penalty, it is very difficult to have it removed (if not impossible) where SARS has correctly issued such understatement penalty.

What you should do and the reasons for this:

  • One

    If you are absolutely sure that you have done everything correctly, then deal with the audit by means of submitting documents and see how SARS reacts. This would mean that you have good understanding of tax and a bit of experience in the field. Without this, if your case has more complex claims such as any travel claim, home office business income, etc then we would suggest that step 2 be followed

  • Two

    Get professional assistance before it is too late. Once SARS has issued an assessment, you have to study the assessment and identify the area of dispute, obtain the legal grounds SARS used and formulate an objection within the complex objections rules by SARS issued July 2014. A tax practitioner might be able to intercede before the above happens. For example, if you have submitted your return only once, a tax practitioner can request a correction and correct the return. Where a return was filed for the second time, there is no 3rd It may be too late to avoid problems which can hopefully be resolved in an objection but again, the rules are complex and have to be followed.

The reasons you should consider using a tax practitioner:

  1. Specialist tax practitioners will be able to identify areas of concern or incorrect capturing of a return.
  2. Where the taxpayer has not toyed with the return after filing it, we can re-file the return correctly and this may even lift the audit. (Again, this is your last chance to file correctly so it is very important that you use a specialist as getting it wrong again could mean understatement penalty)
  3. Some cases are only reviewed and not audited. SARS has different scopes of audits. A specialist will know this.
  4. Specialist tax practitioners will know which documents to send to SARS thereby avoiding further SARS queries and shortening the audit period.
  5. Specialist tax practitioners can advise where the audit will fail and recommend changes before SARS escalates the return to higher level audits.
  6. Where there is an additional assessment by SARS, specialist tax practitioners will be able to read and identify the errors within a few minutes and implement a plan of action to object to return.

 

We have used the word specialist a few times above. The reason for this is that our company works with individuals every day of our lives and deals with so many cases that we have become a specialist in the industry. (Not to mention qualified) Compare this to someone in the office that does tax here and there and charges a small fee for the effort. There is no comparison! We are both qualified in the field as well as experienced tax consultants.