Faulty tax returns: your options

Taxpayers may approach Sars for an “agreed assessment” if they’re unable to submit an accurate tax return.

The Tax Administration Act (TAA) provides for agreed assessments in specific, extraordinary circumstances like significant breakdown in accounting record keeping, destruction of documents in a fire, a computer crash or document theft.

Sait’s Elle-Sarah Rossato says Section 95(3) of the Act doesn’t allow taxpayers to circumvent their responsibilities to maintain accurate records in terms of the TAA.

She says the Act’s requirement is clear: the taxpayer must be “unable” to submit an accurate return, with an adequate reason.

Rossato advises taxpayers to approach Sars, providing reasons why accurate tax returns can’t be submitted, before issuing final assessments.

“It creates certainty and transparency for both Sars and the taxpayer. It provides an opportunity to the taxpayer to pro-actively approach Sars and request estimated assessments where it is unable to provide accurate tax returns.”

Sars may make an original, additional, reduced or jeopardy assessment based on an estimate if the taxpayer fails to submit a return, or offers incorrect/inadequate information.

Sars’ Sandile Memela says the majority of agreed assessments are raised as a result of an audit, initiated by Sars.

Sars will only issue an agreed assessment where it’s satisfied that all avenues have been exhausted and all relevant information is obtained to reach a reasonable estimate, he adds.

Memela says taxpayers are entitled to object to an assessment initiated by Sars. The taxpayer may request a correction by submitting the outstanding return.

Rossato says the ideal situation is a cooperative process between Sars and the taxpayer, where both agree on the assessment amount.

“It is case by case and in many instances will be based on available external information,” she said.