Taxpayers unhappy with Sars’ service

A recent PricewaterhouseCoopers (PwC) survey on the tax experience of over 5 300 of its corporate clients with the South African 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 annually.

PwC’s Elle-Sarah Rossato says the pace at which tax authorities have changed and intensified their approach has 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 says the survey points to even more “intense tax authority activity” in the near future.

The survey was done a month after the Nugent commission of inquiry into tax administration and governance at Sars started.

It was also done around the launch of Sars Service Charter, which sets out what taxpayers can expect from Sars in terms of service delivery and time lines.

Of the respondents, 71% feel Sars never or only sometimes complies with the time periods supplied in the Tax Administration Act (TAA).

Over 60% of respondents believe the service charter will never or only sometimes change Sars officials’ behaviour.

The delayed payment of refunds has been a major pain point for taxpayers. The office of the tax ombud found Sars’ actions caused financial hardship and were, in some instances, unlawful.

The PwC survey showed 62% of respondents never or only sometimes received refunds within the allocated time frame.

In two percent of cases, Vat refunds were paid more than a year after supporting documentation for a verification audit was supplied. In 30% of cases, it took six to 12 months and in 12% of cases longer than 18 months.

In terms of the TAA, a Sars official must provide the taxpayer with a report indicating the stage of audit completion. The taxpayer is entitled to an audit status update within 90 days after audit commencement and within 90day intervals thereafter.

Only two percent of companies received feedback on the audit within prescribed time frames.

The Voluntary Disclosure Programme (VDP) forms part of the TAA and according to PwC its uptake 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 in July.

Around 38% applications were declined because Sars claimed it was not voluntary.