“In the event that the applicant fails to disclose material facts from the application, SARS may withdraw the relief granted…”
With the promulgation of the Tax Administration Act, No 28 of 2011, which subsequently took effect on 1 October 2012, a relief programme of a permanent nature was introduced. This programme has similar characteristics to the past Voluntary Disclosure Programme which could have been applied for until 1 October 2011 in terms of the Taxation Laws Second Amendment Act, No 8 of 2010. The new voluntary disclosure programme, however, does not make provision for the following relief;
• Interest payable on the late payment of the relevant tax.
• Exchange control violations.
• Penalties for the late submission of returns or payment thereof; however, the taxpayer may still seek relief under other
provisions of the Act in terms of which the specific penalties were charged.
• Customs and excise violations.
From this it is clear that the relief offered in terms of the new programme is by far not as friendly as the relief offered in terms of the old programme. It’s as if the Commissioner is offering the taxpayer some cake without the icing, but this certainly is better than no cake at all.
SECTION 255 OF THE TAA
To apply for this relief, a default must have taken place. A default is defined as: “The submission of inaccurate or incomplete information or adoption of a tax position which has resulted in an incorrect assessment being issued.
This assessment should then have the effect of the incorrect tax being paid to SARS, or an incorrect refund made by SARS.”
The application will not be considered if the taxpayer is aware of a pending audit or investigation or in the event that an audit or investigation is in process.The law does state that a senior SARS official, after having considered the circumstances of the audit or investigation, may allow for the application to be accepted in terms of the Act.
For purposes of making this decision, the official will take into account whether the default would necessarily have been detected in the normal cause of the audit or investigation. The decision made by the official should be in the interest of good management of the tax system and best use of SARS’s resources.
“From this it is clear that the relief offered in terms of the new programme is by far not as friendly as the relief offered in terms of the old programme. It’s as if the Commissioner is offering the taxpayer some cake without the icing, but this certainly is better than no cake at all.”
SECTION 230 OF THE TAA
In terms of the Act, an agreement must be entered into between SARS and the taxpayer in a format as prescribed by the Commissioner. This agreement must contain details of the default, the amount payable in terms of the agreement, as well as undertakings by the taxpayer for purposes of paying the debt.
In the event that the applicant fails to disclose material facts from the application, SARS may withdraw the relief granted in terms of the programme as the application is not considered valid for purposes of section 227 of the Act.
Should any amounts have been paid to SARS in terms of the agreement, and the agreement subsequently withdrawn, those amounts will be considered to be part-payment in respect of taxes payable in relation to the default. SARS may furthermore also pursue legal action.
Even though the new voluntary disclosure programme might not be as attractive as its predecessor, it certainly will provide for some relief in the event of a default or omission of a less serious or repetitive nature.
SECTION 227 OF THE TAA FOR A VOLUNTARY DISCLOSURE TO BE VALID, THE FOLLOWING REQUIREMENTS MUST BE MET:
• There must be a voluntary disclosure of a default which has not previously been disclosed.
• All material aspects relating to the default must be accurately and fully disclosed. The default must have the potential of an understatement penalty being levied, and may not result in a refund.
• The disclosure must be made in amanner as prescribed by the Act.
A taxpayer may apply for a non-binding private opinion with regard to one’s eligibility for the programme, as could be applied for under the previous programme.
A successful voluntary disclosure applicant will enjoy the following relief:
• No understatement penalty will be charged provided that the applicant has not been grossly negligent or intentionally
• Administrative non-compliance penalties chargeable under part 15 of the TAA or any other tax act will not be charged if the taxpayers application for the programme is successful. Please note that penalties charged for late submission or payment of a return are excluded.
Once agreement is reached between SARS and the taxpayer, should an assessment be issued which should give effect to the agreement. This assessment is not subject to objection or appeal.