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Get Your Tax Affairs Sorted Out—Now

Thursday, 28 January 2010   (0 Comments)
Posted by: Author: Kemp Munnik
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Get Your Tax Affairs Sorted Out—Now

Those who don't will receive an ominous letter from SARS in the post soon

In a recent letter to tax practitioners, SARS has advised that they will be issuing letters of suspension or deregistration to all vendors who have failed to submit returns for prolonged periods or who have submitted returns which reflect no liability over 12 months.

The consequences will be that these companies will be required to undergo an onerous revalidation process, not dissimilar to the beefed up registration provisions introduced during 2008. In other words, one will be required tore-submit certified proof of identification of the company representations and the physical address of the business, a business plan, a justification to remain registered, proof of invoices, and probably an in loco inspection from SARS.

There are likely to be a number of innocuous cases which get caught in the cross-fire. For instance, large projects with a lengthy pre-commissioning phase, companies which only render zero rated supplies, and start-up operations which have gone through the pains of registration but which have experienced start-up delays for a host of reasons, may all receive an ominous letter in the post soon.

Added to this, VAT deregistration is a VAT event in its own right, and unsuspecting vendors face a VAT liability based upon the lesser of cost or the open market value of appropriate assets on hand at the time of deregistration. Also, one's VAT obligations do not end up on deregistration—these obligations and SARS remedies will survive deregistration.

Taxpayers are therefore urged to attend to this sooner rather than later.A deregistration is often preceded by a suspension notice,but one should not wait for deregistration. The requirements for lifting a suspension, although onerous, are not as daunting as going through the entire registration process again. Recent experience identification suggests that new registrations are rejected even if anyone director's personal tax affairs are not up to date [although these requirements have recently been relaxed slightly—see previous article], and proposed legislation has paved the way for biological verification such as fingerprinting or iris identification.

Source: By Kemp Munnik (Taxbreaks)



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.

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