SARS is now issuing ‘final demands’ to taxpayers – how it works and how you can protect yourself

As the South African Revenue Service (SARS) has spent the past year implementing collection measures more forcibly than ever before, do not think you have escaped its radar, warns legal manager at Tax Consulting SA, Jashwin Baijoo.

Baijoo said that SARS has in recent months greatly increased the pressure of its collection measures, with a ‘final demand’ being sent to a company or its representative taxpayer, for any and all tax liabilities.

SARS follow-through has also become more drastic, he said. Where the final demand would previously be ignored, SARS is now “going straight for the jugular” with a third party appointment or Sheriff’s attachment in lieu of the outstanding amount.

“As a last port of call, the most drastic collection measure – a forced liquidation – may be implemented by SARS,” he said.

Baijoo said that companies feeling like they are staring down the barrel of a gun, wondering how they are going to pay this month’s salaries, do have solutions available, but none so favourable as an application for a compromise of tax debt.

This is a ‘cease-fire’ which SARS has, in recent times, become more amicable toward, showing great compassion for the financially constrained SME, he said.

“If a business has received a letter of demand from SARS in respect of missed PAYE or VAT payments, action must be taken immediately to avoid the tax debt trap.

“Tax debt, purported or not, will not go away, but will only spiral out of control and drain the life out of the business, until the taxpayer is drowning in debt and has no way of escape.”

A solution

Given the unpredictable nature of the pandemic and its devastating effect on the country’s economy, companies should not jump straight to the worst-case scenario and commence with liquidation proceedings, Baijoo said.

This should in essence be any company’s last resort and is positively preventable by means of engaging SARS in compromise negotiations.

“To protect yourself from SARS, it remains the best strategy that you always ensure compliance. Where you find yourself on the wrong side of SARS, there is a first-mover advantage in seeking the appropriate tax advisory assistance, to ensure the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes.”

However, where things do go wrong, SARS must be engaged legally, “and we generally find them to be agreeable to the utmost where a correct tax strategy is followed,” he said.

“As a rule of thumb, any and all correspondence received from SARS should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but the taxpayer will also be correctly advised on the most appropriate solution to ensure their tax compliance.”

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SARS is now issuing ‘final demands’ to taxpayers – how it works and how you can protect yourself