Survey shows up Sars’ flaws

A recent survey by PricewaterhouseCoopers (PwC) on the tax experience of over 5 300 of its corporate clients with the SA Revenue Service (Sars) points to an expected increase in tax audits and disputes.

A high number of respondents (85%) said it was likely Sars would verify or audit the company for post-submission of corporate income tax returns on an annual basis.

PwC’s Elle-Sarah Rossato said the pace at which tax authorities had changed and intensified their approach had been rapid. “In South Africa, this has been complicated by a number of structural, leadership and policy changes within the revenue service over the last five years.”

Rossato, of the SA Institute of Tax Professionals tax administration committee, said the survey pointed to even more “intense tax authority activity” in the near future.

The survey was done at the time of the launch of Sars Service Charter, which sets out what taxpayers can expect from Sars in terms of service delivery and timelines.

According to the survey, 71% of respondents feel Sars never or only sometimes complies with the time periods in the Tax Administration Act (TAA).

The delayed payment of refunds has been a major pain point for taxpayers. The office of the tax ombudsman found the actions of Sars caused financial hardship and were in some cases unlawful. The PwC survey showed that 62% of the respondents “never or only sometimes” received refunds within the allocated timeframe.

The survey also showed that in 30% of the cases, it took six to 12 months to complete an audit, and in 12% of the cases it took over 18 months.

The Voluntary Disclosure Programme (VDP) forms part of the TAA and, according to PwC, the uptake on this relief has been “immense”.

“However, we have seen increasing resistance from the VDP unit and delays in considering and processing applications.”

The turnaround on applications was 10 months at the time of the survey (July 2018).

About 38% applications were declined because Sars claimed it was not voluntary due to a pending audit, verification or investigation.

Rossato said 30% of the taxpayers recommended that Sars improve the technical skills of its staff.