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Re-applying for voluntary disclosure programme (VDP) relief

28 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: 1. Would I be able to re-apply for VDP for relief on the understatement penalty imposed by SARS after I have received the tax assessment?

2. Would the grounds for the new VDP be that the taxpayer qualified for "Gross Negligence before notification of an audit or investigation”? Do I need to add more to the statement?

"Gross negligence”, meaning that the taxpayer did not lodge any of the ITR14 returns on or before due date.

A: We don’t understand your question relating to the understatement penalty. You have indicated that the returns have not been submitted and that was in your view the default. We assume that you will not deliberately make an understatement when the return is submitted. The penalty that you refer to is probably the one in respect of ‘non-compliance’. In terms of section 210(2) non-compliance is failure to comply with an obligation that is imposed by or under a tax Act and is listed in a public notice issued by the Commissioner, other than –

(a) the failure to pay tax subject to a percentage based penalty under Part C;

(b) non-compliance in respect of which an understatement penalty under Chapter 16 has been imposed; or

(c) the failure to disclose information subject to a reportable arrangement penalty under section 212.

The voluntary disclosure relief excludes a penalty imposed under Chapter 15 or in terms of a tax Act for the late submission of a return or a late payment of tax.  

A new VDP application for failure to submit a return will get the same response from SARS.  If the default relates to an understatement (as defined in section 221) in a return already submitted you can put in a new VDP application.  The behaviours listed in the understatement penalty percentage table are not grounds for the application.  The requirements for a valid voluntary disclosure are listed in section 227.  

All references were to the Tax Administration Act.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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