Three SARS demands you can’t ignore – or risk fines and jail time
With tax season 2024 in full swing, taxpayers have been warned not to tarry or ignore the South African Revenue Services (SARS) when it comes knocking, or steep fines and penalties or jail time may be on the cards.
According to tax experts at Tax Consulting SA, non-compliance with a tax act is a criminal offence under South African tax laws, and SARS has not been shy about pursuing even the highest-profile taxpayers in pursuit of its mandate.
Under section 234 of the Tax Administration Act, 28 of 2011, SARS outlines a veritable laundry list of criminal offences that could land taxpayers in hot water.
The tax offences range from serious offences, such as the deliberate falsification of documents and the dissipation of assets to frustrate SARS in carrying out its duties, to relatively minor offences, such as failing to notify SARS of a change in the taxpayer’s public officer details.
If caught on the wrong end of SARS’ processes, Tax Consulting said that taxpayers should act immediately.
“Knowing when to act is imperative, and usually SARS’ firing squad is preceded by a Letter of Demand,” Tax Consulting said.
“Upon receipt, your sensors should immediately be on high alert as this is a serious matter and ignoring it can lead to severe consequences. It is crucial to address the highlighted non-compliance immediately.”
Failure to comply with SARS’ demands can lead to overwhelming tax debt, severe collection measures, or even jail time, as evidenced by the plethora of convictions secured by SARS against local celebrities, doctors, and VAT Fraud perpetrators.
The group highlighted three instances where taxpayers should immediately spring into action:
- Filing Your Taxes: The most relevant for this week, is remembering to file your taxes. This is a legal requirement for all persons (with a few exceptions), and failing to do so will have serious consequences, including accrued penalties.
- Request for relevant material: When SARS requests additional information, taxpayers must comply promptly and within the permissible timeframe provided by SARS. Failure to do so will again result in taxpayers being in violation of the law.
- Final Letter of Demand: Failure to respond to a final demand for payment of outstanding taxes can result not only in the sheriff of the High Court paying you a visit, but also potential jail time – taxpayers have 10 business days to comply.
“Receiving a Letter of Demand from SARS is never to be ignored, and often, where the correct response is not timeously delivered, spells the beginning of the end for the recipient taxpayer,” Tax Consulting warned.
No room to hide
The tax experts said that a common misconception among low-medium income earners is that SARS does not know much about them and that tax obligations can be safely ignored because they are not “big fish.”
However, the reality is that with the advent of AI and machine learning in SARS’ processes, the taxman knows more about your finances than your own family does – and this is a lesson that many affluent earners and high-profile businesses have learned the hard way.
Most recently, billionaire Christo Wiese and three others were dealt a blow by the Supreme Court of Appeal (SCA) in their battle against SARS, which is pursuing taxes owed by companies associated with the individuals.
The case also raised red flags for tax practitioners, tax advisors, lawyers, accountants, and company directors: any third party that is potentially involved with deliberately impeding the collection of a tax debt can be held liable, Tax Consulting said.
“SARS is making clear that no matter how much money you have, if you are non-compliant, you are on their hit list,” the group said.
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