Q: I was approached
by a client to assist with submitting his outstanding VAT returns. Must he apply
for VDP? If so, how? What is the best way to tackle this?
A: If a vendor
does not submit a return (we assume the VAT201) it is a criminal offence –
refer to section 234(d) of the Tax Administration Act. If amounts were due to SARS and were not paid,
the vendor will also be liable for the late payment penalty (a percentage based
penalty – refer to section 213 of the Tax Administration Act). The last penalty can’t be waived under a
voluntary disclosure application – section 229(c).
For purposes of a voluntary disclosure as default is defined
as the failure to submit information where such non-submission resulted in the
correct amount of tax not being paid – section 225(b).
Outstanding tax returns that relate to a VDP application can
be submitted to SARS through normal channels at any time before the VDP
application is processed. If the return
is assessed by SARS before the VDP application is processed, interest and
penalties that are eligible for VDP relief will be waived when the VDP
application is processed and a VDP agreement concluded. The SARS debt collection division is aware of
this and will refrain from instituting collection steps on eligible interest
and penalties until the VDP application is finalised.
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.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.