Northern Region 1 SARS Stakeholder Meeting: Minutes
15 March 2013
Posted by: Author: SAIT technical
Source: SAIT Technical
On Friday the 22nd of February, SAICA and SAIT had
a meeting with the SARS Randburg branch to discuss operational issues raised by
our members. The meeting was very interactive and valuable insights were
obtained from both the bodies and SARS. The minutes of the meeting are as
1. Loss of
supporting documents in SARS offices
On 6 August 2012 a request was received from SARS to submit
supporting documents for a taxpayer. On 6 September 2012 the supporting
documents requested, including the medical expenses invoices and receipts, were
e-filed. The relevant supporting documents were also handed in at the
Randburg office on 5 September 2012. On 25 January 2013 we received a notice of
invalid objection, as SARS claimed that the objection was not received
timeously. The notice of objection was e-filed on 31 January 2013.
What is happening to the documents and the objections that are being e-filed,
and hand delivered to your offices?
SARS response: The
supporting documents issue will be resolved. The documents were sent to
Alberton for screening. Members are complaining that documents submitted via
e-filing go missing. SARS reiterates that members must request to scan their
documents at a SARS branch as proof of delivery and not merely just drop off
the documents at the SARS branch office.
contacting taxpayers directly, instead of the tax practitioner
The taxpayer received a call from the SARS centre demanding
payment of the amount due, in respect of the 2012 assessment. Why is SARS
contacting taxpayers directly, and not the tax practitioner?
Tax practitioners are complaining that SARS is contacting their clients after
they assured their clients that a specific matter is resolved. This causes tax
practitioners to appear incompetent and not in control of their clients’
Another problem is that when SARS staff contact a client,
they don’t leave any contact details. This makes it impossible for the taxpayer
to correspond with the relevant SARS staff in subsequent proceedings.
SARS response: SARS
has a legal obligation when a taxpayer is in a tax due position to contact any
person identified on the system. If the tax practitioner is not available, then
SARS will call the tax payer themselves. SARS prefers to make use of calls
rather than emails, due to the rapid response rates that can be obtained.
SARS reiterates that according to law, the ultimate
responsibility for tax rests upon the client. SARS however agreed to first call
the tax practitioner, and to only contact the client when the practitioner is
SARS may consider giving reference numbers to taxpayers
which will ease the process of contacting the call centre. SARS will follow up
the matter with Piet Nel.
3. Requests for
Our firm e-filed ninety five individual tax returns in December
2012 and January 2013. Of the ninety five returns that were e-filed, we
had requests for supporting documents in respect of forty five of these returns
(47%). I have already raised this issue at the meeting held on 1 March
2012. Why does SARS not just go back to the old method when returns were
submitted manually, together with the supporting documents? It takes an
inordinate amount of time to collate all the supporting documents when SARS
places such a request. It needs to be borne in mind that tax
practitioners’ offices are extremely busy now with provisional tax for their clients;
hence it is not feasible, practical nor possible to suddenly stop processing
provisional tax returns and collate all the supporting documents to e-file to
SARS response: SARS reiterates that
they are risk driven. Once most of the fraudulent activities are identified,
then the risk assessments are changed. SARS stands its ground and says that the
risk engine only identifies 10% of the taxpayers. SARS is also in the process
of adding another eight risks to the risk engine due to fraudulent activities
in certain sectors.
Tax practitioners wanted to know why they cannot submit the
supporting documents immediately with the return rather than having to wait
till a few weeks/months later for the request to submit supporting documents.
This would save time and prevent unbillable hours being spent by the tax
practitioners (as the client has already been billed for the service of
rendering the return). SARS stipulated that this would clog up their system but
this suggestion would be followed up at the next stakeholders meeting. Tax
practitioner bodies could also obtain statistics on their members as to the %
of their client base that has been requested to submit supporting documents.
4. Penalties in
respect of the "Under estimation – Provisional tax" being levied when the
taxpayer has PAYE deducted from his monthly salary, and a subsequent refund is
due to the taxpayer
This matter has been raised with SARS at previous stakeholders’
meetings. The taxpayers had PAYE deducted, which exceeded the tax payable
for the year. Refunds were due and subsequently paid to the
taxpayers. How therefore can there be a penalty for "Under estimation –
Provisional tax”, when the estimated taxable income for provisional tax
purposes was based on the year last assessed, plus the attributable 8%, and the
taxpayers’ assessed incomes were below R1 million?
SARS response: SARS
concurs with member and is in the process of resolving the matter.
notification or letter of finding issued in respect of an audit
On 12 March 2012 we received an e-mail from Maki Pelotona, with an
attached letter requesting supporting documents for a taxpayer, in respect of his
2011 return. All documents and information requested was e-mailed back to
Maki on 26 March 2012. After this date we received no further
correspondence from Maki. During the course of our dealings with the
taxpayer, we requested a Statement of Account for assessed taxes. On the
Statement of Account it was noted that the taxpayer has been selected for an audit,
to which we had received no notification or correspondence. We then wrote
to SARS on 3 October 2012, bringing this to their attention, and stating that
we have received no correspondence or notification relating to this audit, and
requesting them to contact me with any queries or issues that they have, to
which I received no reply. On 27 November 2012 SARS issued an additional
assessment, disallowing all expenditure, and advising the taxpayer that they
owe SARS R5 654 125.69. SARS never issued a letter of findings
relating to the abovementioned audit. I then contacted your call centre
on 8 February 2013 to find out why this additional assessment had been raised.
I was advised that SARS had requested supporting documents to be
uplifted, and for an IT14SD to be completed, which we had not attended
to. I attached a screen dump of the 2011 tax work page for this
client. You will note that there is no correspondence on this work page,
nor is there any request for an IT14SD, or supporting documentation. We
now have to lodge objection to this incorrect, ridiculous assessment, in an
attempt to correct it. Please advise why we were never notified of an
audit, nor were we provided with a letter of findings related thereto, nor were
we ever requested to upload any documentation onto e-filing, or to complete the
SARS response: SARS does not send
out requests for compliance audits. This matter will be escalated to the
6. SARS Call
The SARS call centre is extremely difficult to get through to, the
level of helpfulness, friendliness and efficiency is unacceptable.
SARS response: SARS requests people to physically come in to a SARS branch
if the call centre is blocked. SARS however acknowledges the problem.
SARS is listening into some of the calls to identify SARS
officials providing unfriendly service. SARS assured the members that
unfriendly and unhelpful service would not be tolerated and that disciplinary
action would be taken against such officials. Tax practitioners are urged,
however, to take down the reference numbers provided to them so that the
matters can be followed up quickly.
7. Notice of
Incorrect judgments are issued against various taxpayers. Various
request and communication sent to SARS attempting to resolve the matters were
either ignored by SARS or not yet rectified.
SARS response: SARS is going to provide feedback on this matter during this
8. 21 working days’ notice not followed by SARS
The 21 working days’ notice by SARS is not followed, for the
taxpayer. The original "Verification of income tax return” request for the
submission of supporting documentation is dated 18 January 2013. The final request letter however is dated 8
February 2013, in which case the 21 working days has not expired.
SARS response: SARS
reiterates that they work according to calendar days.
of Deceased Estates
Can SARS please clarify what is happening with the final
assessments for Deceased Estates? We cannot finalise with the Master’s Office
as the SARS staff have been removed from their offices and have
been centralised somewhere in Pretoria with no contacts. No telephones,
no emails and no names of officials are available.
SARS response: The last income tax return of a deceased taxpayer must be
submitted via e-filing with the relevant code for a deceased individual.
For example, a VAT registration now requires a certified copy of
company registration documents (CIPC). The application form does not require
this. In many instances the front office goes through an application, for
example, the updating of banking details and finds it in order whereafter the
back office will find the documents incomplete and send it back to the
applicant. This is not a productive process.
SARS response: SARS is also experiencing problems. SARS had inconsistency
between their standard operating procedures and the VAT 101 form. The matter
was escalated and SARS is in the process of updating the VAT 101 form to align
it with the standard operating procedures. SARS is however highly aware of
numerous fraudulent VAT registrations and in an attempt to mitigate this risk,
applications are sent to the Alberton screening centre for review.
Why can the SDL field not be activated via e-filing? It is
unnecessary that one has to give written notice to SARS and then hope for the
best. As time passes, penalties and interest may become payable.
SARS response: E-filing is not linked to the core system
at the moment. In future, as modernisation increases, SARS may consider
including the SDL field in e-filing.
the financial statements of the seller to allow the purchaser to register as a
going concern purchaser.
This is private
information of the seller and not ordinarily available to the purchaser.
Surely SARS has
the VAT history of the seller available by virtue of the VAT registration of
the seller and can confirm (silently without breach of secrecy) the fact that
the seller is a vendor and accordingly that the purchaser qualified to
It would seem that every office has its own
practice with regards to making the application; some offices will only accept a letter from
the bank as proof of bank account even though a bank statement (which meets the
requirements) may be accepted. Where the applicant is not registered for
income tax (new business) one office will accept the IT77 together with the
application as a VAT vendor, and the other not.
SARS response: SARS uses the seller’s VAT details only to
verify his turnover. SARS would only accept the following to support the
application: the sale agreement (if it reflects the turnover), audited
financial statements (which presents a problem), tax invoices, or tax returns.
VAT registrations at certain SARS branches (including the
Edenvale branch) must be done by making an appointment at reception due to the
high demand to register. Prospective vendors would therefore be required to
visit a SARS branch in person. SARS will however give notice of the branches
where an appointment is required.
13. Errors on
A lot of incorrect assessments are coming through,
objections are lodged against these. To get SARS to rectify their errors can
take up to 4 months, if lucky.
SARS response: In
order to reduce the turnaround time with Notice of Objections, taxpayers are
requested to immediately submit their supporting documents via e-filing. A
request for correction must be made for a random error in a return.
14. Errors on
We find a lot of e-filing errors, such as documents not
available on e-filing, and to try and obtain these documents can take hours
upon hours on the phone with the call centre.
SARS response: The
matter will be escalated.
15. SARS branches
To visit a SARS branch has become one of the biggest nightmares
- something that took half an hour 5 years ago, now takes a minimum of 3 hours.
The queues are always a mile long, no matter what time of the day. SARS needs
to make sure that all counters are manned.
SARS response: We
acknowledge the problem. It should
however be reiterated that the problem is cyclical. Generally, when we are not
in e-filing season, the offices are not that busy.
16. Objections via
When is SARS going to enable us to lodge objections via e-filing
for trusts and to lodge ADR’s? We file the tax return and are assessed and
that’s all we can do. How do we object and how do we send documents if these
are called for?
SARS response: Trust
procedures have not yet been modernised enough. An ADR and NOO must be
submitted at a SARS branch. Trust modernisation is on next year’s agenda.
17. PAYE payments on
For PAYE purposes, on e-filing when we attempt to pay the
amount due for the latest EMP 201 return, we find details of many amounts for
earlier periods that have all been paid. How do we clear these out?
SARS response: A
member made a recommendation that new forms must be developed to ensure that
additional payments are correctly allocated. SARS concurs.
Provisional Tax – Basic Amount 1/2013
A number of individuals
with taxable income over R1 million have received letters from SARS in respect
of their first provisional tax payment from the LBC – Durban. Their IRP6’s were
prepared based on the basic amount.
Herewith an extract from the standard letter issued by
"Paragraph 19(1)(b) of the 4th
Schedule of the Income Tax Act requires a company to furnish "an
estimate of the total taxable income which will be derived by the company in
respect of the year of assessment in respect of which provisional tax is or may
be payable by the company.
”Paragraph 20 of the Fourth Schedule only directs when
and how penalties are to be imposed in the event of an underestimation. This
does not imply that SARS should accept taxpayer’s estimate if it differs by 20%
or less than the estimate required in terms of paragraph 19(1)(b).
Paragraph 19(1)(c) directs that the estimate furnished
should not be lower than the basic amount. The mere acceptance of the of the
basic amount does not absolve the company from complying with the provisions of
Paragraph 19(3) empowers the Commissioner to "call
upon any provisional taxpayer to justify any estimate made by him in terms of
sub-paragraph (1), or to furnish particulars of his income and expenditure or
any other particulars that may be required”.
"Based on the
above, kindly email me the company’s financial records for the first 6
months (1 March 2012 to 31 August 2012) e.g. Management Accounts, Trial Balance
and Tax computation.
”The letter appears to be a standard letter that has
been sent to these taxpayers and inappropriate paragraphs are being applied to
these taxpayers who are INDIVIDUALS and not companies.
SARS response: The
matter is escalated to level 3 to look into the matter.
19. Delays for VAT
Why are there such delays with the refund due to VAT
vendors? The refunds should be made within 21 business days but SARS
immediately wants a VAT audit. If the vendor owes money to SARS, the legal
collection process starts immediately and SARS just takes the money out of the
vendor’s bank account without any notification.
SARS response: This
occurs on a seldom basis and would only occur if the supporting documents are
not submitted in time.
20. Diesel Rebates
rebate when "diesel distribution and use logbooks” cannot be produced. Often
farm workers are not schooled, and it is impossible to maintain logbooks from a
practical point of view.
The VAT201 return
does not allow a payment to be created in the event where the rebate is more
than the VAT amount.
SARS response: SAICA
established a sub-committee to recommend legislative changes in an attempt to
resolve the matter. The professional bodies also suggested that the communities
(eg. farming) be engaged with directly as there has been no formal
communication with/to them (since 2010).
Our view on the logbook is that if you record the
business trip and the balance is private then you have sustained your onus.
SARS officials require a detailed DAILY logbook.
The taxpayers have been keeping a monthly record of the opening and closing mileages and diarise
the days they do business mileage and note the kilometres travelled. At the end
of the month they have a total mileage and a record of the business mileage.
The difference is recorded as private. The SARS official said they are not
accepting that and want it daily and relying on Draft Interpretation Note No14.
The SARS official was requested to put it in writing and she said they don't do
letters and are just phoning the client and we were informed that if we don't
upload a daily logbook for the 2012 tax return they will dis-allow the claim.
The Income Tax Act does not define a log book.
SARS response: In
Gauteng, members are required to adhere to Draft Interpretation Note No 14. The
implications are that a taxpayer would be required to keep record of the
following for business kilometres: the date, total distance travelled, where
did you go, and the reason for travelling. There is an example of a logbook on
the SARS website. This is especially important for commission earners that have
to provide a daily logbook.
22.Tax Clearance Certificates
Ongoing issues are encountered
by members where a taxpayer’s affairs are in order but TCC’s are declined for
no valid reason. For example the person has a double barrelled name, or the
Income Tax number is not linked to the VAT number. Applicants are informed that
they may not apply for new TCC prior to 7 days before expiry of old TCC, but on
application is given notice that application can take up to 21 business days.
encountered with this process is that it has a damaging effect on the South
At what stage is
the modernising of the TCC application process going to take effect?
SARS response: SARS
acknowledges that the application process under the current state of affairs
poses a problem. SARS is however currently busy implementing a new TCC system
which will come into effect on 1 April 2013. The new system would be more
efficient and would rid itself of the abovementioned problem.
23. Source code –
At a previous meeting we were informed that SARS will
not consider this deduction/non assessment if the incorrect source code is used
on the IRP5. This results in unnecessary objections – can SARS’s view on this
SARS response: SARS
acknowledges the problem. This matter will be addressed at the next
24. Obtaining Tax
This is an ongoing issue. In many instances an
employer tries to get his/her ex-employee’s tax number from SARS but is unable
to do so as details cannot be accurately verified. Are there any alternatives?
SARS response: We will
never give an employee’s tax number to an employer. The employer must ask the
employee for his tax number upon appointment. If the employee only becomes
liable to register at a later stage due to his taxable income now exceeding the
tax threshold, then the employer must register the employee to obtain his tax
number. SARS states that it would like to go to clients and their employees to
educate them on these tax matters. This would also tend to ease the process of
ensuring that taxpayers register when they become liable to.
25. IT14SD – Basis
Surely the fact that the taxpayer is to receive a
refund is not in itself a basis for the selection of the IT14SD.Surely this should only be used if there is a
disjunction in the correlation of income tax and VAT.
SARS response: Our risk
engine only identifies 10% of all taxpayers and a refund does not necessarily
trigger a request to complete an IT14SD.