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Get Your Ducks in A Row...Part 4

01 February 2007   (0 Comments)
Posted by: Author: Daniel Erasmus
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Get Your Ducks in A Row...Part 4

The crux of the principle is that there is a very clear distinction between a civil investigation or administrative audit and a criminal investigation.

Far too often SARS officials, with the assistance of the police, use their draconian powers of gathering information, documents and things under the Income Tax Act, the VAT Act and the Customs & Excise Act, not only to make an administrative check on whether or not a taxpayer has paid their fair share of tax, but also to use this easy method of obtaining information as an alternate search and seizure process where the information is actually then used as evidence to criminally prosecute the taxpayer concerned.

The reason for SARS doing this is obvious.If you are facing both an assessment and a criminal prosecution for tax evasion, you are going to want to settle your outstanding taxes very quickly without putting up any fight on the accuracy of the assessment, so that you can convince SARS not to proceed with the criminal prosecution. This is an obvious area of abuse of power.

What the Jarvis principle says, in essence,is that if SARS use their information gathering powers under the Revenue Acts, they can only use the information gathered from a taxpayer to issue additional assessments. They cannot use that information as evidence in a criminal prosecution. This would be a transgression of the fundamental constitutional right not to give self incriminating evidence.In those few instances where taxpayers are forced to give self-incriminating evidence, the law is very clear that such evidence cannot be used in any criminal prosecutions against the person forced to give that evidence.

The Jarvis principle goes further to state that if the SARS official has the intention to criminally prosecute at the time of  gathering the information, then in effect,the information-gathering powers of the Income Tax Act, the VAT Act and the Customs & Excise Act, are no longer available to him.If the information is to be used as evidence in a criminal prosecution, then the SARS official must go through the formal search and seizure proceedings by applying ex parte to a court for the appropriate search and seizure warrant.

The Jarvis principle is a very important principle to bear in mind when giving information to SARS. So often taxpayers are unaware of important principles such as the Jarvis principle. By not being aware of these principles, taxpayers may end up in difficult situations that can be avoided. The International Tax Institute is running Tax Risk Managed seminars through this year to inform taxpayers and their advisers of some of these important principles.

Source: By Daniel Erasmus (TaxTalk)


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