South African taxpayers take note: SARS is doing all it can to re-establish its ‘deterrence factor’

The VBS Mutual Bank case gained momentum when state witness, Philip Truter, was sentenced on 7 October 2020 to an effective seven years in prison, after pleading guilty to racketeering, fraud, corruption, money laundering and, finally, the failure to submit his personal tax return.

The question is, why would the National Prosecuting Authority (NPA) include the offence relating to his tax return in the plea agreement, considering it may have no bearing on the case and Truter already agreed to plead guilty to far more serious charges?

Because the taxman wants you to know what happens if you do not file your return, said Roxanna Naidoo, attorney at Tax Consulting SA.

“Over recent years, SARS has been plagued by a perception that it is unwilling or unable to effectively bring delinquent taxpayers to book. Under the direction of Edward Kieswetter, there has been a concerted effort to change this perception,” said Naidoo.

“Initially, SARS’ new-found commitment to punish transgressors may have had little conviction, but such scepticism is no longer warranted and slapping handcuffs on Mr Truter for a tax offence  – among others – is the case in point.”

Naidoo said that Truter’s case is just one aspect of an integrated strategy employed by SARS to close in on non-compliance and restore taxpayer morality.

Taxpayers who suspect they are dealing with the old SARS should go and study the institution’s media page, over the last year in particular, where SARS makes it known when delinquent taxpayers are brought to book and constantly reminds taxpayers of its commitment to improve its systems to make it difficult for non-compliant taxpayers, she said.

Legislation changes 

Naidoo said that most South Africans should also be aware that the latest tax bills which intend to amend the Tax Administration Act to make it easier for SARS and the NPA to prosecute taxpayers who fail to meet their tax obligations.

These bills have now reached parliament where Tax Consulting SA were one of only two tax firms who made oral submissions on these amendments to the Standing Committee on Finance, she said.

“The proposed amendment was met with fierce opposition from inception, but it seems clear that government wants to correctly forge ahead with this – taxpayers will be held to a higher standard of accountability and ignorance will no longer be an excuse.

“Taxpayers should read the lay of the land – SARS is doing all it can to re-establish its deterrence factor; from implementing new systems to changing the law.”

Naidoo  said that taxpayers who have skeletons in their closet will have two options:

  • They can run the gauntlet once more in the hope that they will again go undetected, in which case they may soon join Truter; or
  • They can regularise their affairs and turn over a new leaf.

The only legislatively enabled way to avoid criminal prosecution, where you have been non-compliant, is to file an application under voluntary disclosure application (VDP), she said.

“If done correctly, the VDP provides a non-compliant taxpayer with full amnesty from criminal prosecution and understatement penalties.

“But, to paraphrase the Commissioner, “this generous concession only applies where you speak to SARS before they speak to you.”

Read: Tax hikes proposed for South Africa

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South African taxpayers take note: SARS is doing all it can to re-establish its ‘deterrence factor’