How Sars’ enforcement eroded

NUGENT INQUIRY: OFFICIALS DETAIL HOW NEW MODEL DID IT

‘We’ve lost possibly hundreds of millions of rands in few years due to inefficiencies.’ Moneyweb

South African Revenue Service (Sars) officials told the Commission of Inquiry into Tax Administration and Governance by Sars (Nugent commission) how the entity’s enforcement capability became fragmented when a new operating model was introduced.

Enforcement units deal with a wide range of cases, including high net worth individuals who use special purpose vehicles to hide money, the manipulation of customs, Ponzi schemes and the illicit economy.

Pieter Engelbrecht, who headed the centralised projects division in the enforcement unit from 2012 to 2016, becoming a senior specialist in the legal counsel division after the new model was introduced, said the current enforcement effort did not have the capability to deal with complex investigations.

He said it was impossible to audit or investigate one individual linked to 30 or 40 entities with different income streams and asset bases by looking at one entity or tax type at a time. Previously, an audit would recreate the taxpayer or group’s complete financial position as this was the only way to determine taxability. Engelbrecht said that in May, discussions began within Sars about reverting to the old methodology.

Fragmenting the enforcement divisions also caused delays. One affidavit cited that it took eight months to get approval for a sequestration due to fragmentation in the debt management division, putting Sars in a “row boat”, while the taxpayer was in a “speed boat”.

Dion Nannoolal, senior manager for high value audit debt collection, said that in the past, they required between four to

My passion, my love, my life, Picture: Michel Bega Former picture editor at The Citizen, Wessel Oosthuizen, left, with former Springbok wing Ray Mordt at the opening of Oosthuizen’s exhibition, titled Sport:this week. It features 138 photographs of significant sporting moments and greats, spanning 56 years. It’s at Sportpro SA/World of Rugby in Randburg for six weeks.