SARS and IT14SD
12 November 2012
Posted by: TaxFind™
SARS and IT14SD
The recent downturn in the economy affects not only private companies, but government organisations too, including the South African Revenue Services.SARS has been hard at work to identify away to increase the analysis of company VAT,PAYE and customs information to ensure that they receive what they are legally due.
In October 2011, the Supplementary Declaration (IT14SD) form was introduced.This form primarily ensures VAT compliance and verification through the reconciliation of all financial data.Prior to the introduction of this document, companies could simply extract a report from their existing financial system and submit the values.If you were one of the unlucky ones, you got a visit from the tax man to double check that the submitted figures were indeed correct. But going forward that will no longer be the case.
For the time being, the form only needs to be completed upon request from SARS. But going forward it will become a mandatory requirement for all registered companies to submit it. The submission of the form is required within 21 days so it really doesn’t give much time to analyse hundreds or possibly thousands of items to ensure that they are compliant. Very few companies have either the systems or human resources capable of performing these highly complex reconciliations.
Some companies might be able to upgrade their existing systems to ensure that they are able to produce the data in the required time frames.However, this is no simple improvement as the software would have to be able to do the verified reconciliation of the differences required by SARS. These calculations are complex and not easy to bolt onto existing systems.Furthermore a single system upgrade might not suffice, as the form requires VAT, PAYE and customs data,from data that is stored in multiple separate systems. In such cases analysis needs to be done from reports produced from the source systems.Reports have an inherent weakness as they can introduce added problems of information that has been manipulated or even excluded.
Other companies are forced to use a largely manual process but lack either the capacity or specific skills needed resulting in the appointment of external consulting firms at additional expense.A manual process is time consuming and submission deadlines would need to be renegotiated with SARS. Even after many months of effort, it is unlikely that the result will be 100% accurate as human error will always be a factor.
The best solution would be a fully automated data analytics system that accesses 100% of VAT-related data from source regardless of where in existing software it is housed.Relevant data from SAP, Oracle, JDE,AS400, Excel or other systems would be extracted and processed by examining every transaction and identifying any the exemptions that require investigation.The tax rules and calculations would be applied correctly and consistently to ensure a reliable result. An automated system would provide an easy way to identify problems within the tax calculations, eliminate human or system errors, detecting possible fraudulent transactions and preventing companies having to face financial penalties from SARS.
CQS Technology Holdings, together with BDO,have launched a VAT continuous monitoring solution to address all of these issues. Using the power ACL, the worldwide leader in data analytics, VAT|CM is able to ensure tax compliance for income tax, corporate tax, VAT,service tax, customs, sales tax, use tax, PAYE taxes or other taxes that companies may be required to pay.
Simply stated it produces the IT14SD reporting as well as the supporting data accurately and timeously, meeting all of SARS regulatory and compliance requirements.
Source: By TaxTalk