The South African Revenue Service (SARS) has decided to start issuing estimated assessments in situations where taxpayers miss the deadline for the submission of proof of their value-added tax (VAT) returns.
The rule now is that once the estimated assessment has been issued, taxpayers won’t be allowed to submit a request for correction for the same period. A VAT vendor is usually given a grace of five years to submit a request.
According to Webber Wentzel consultant, Des Kruger, the South African Revenue Service (SARS) has been authorized to implement estimated VAT assessments since the introduction of the Tax Administration Act (TAA) in 2011 but has just lacked the efficaciousness to do so, until now.
Shedding more light on the topic, Zulfah Mullins, tax compliance officer at Hobbs Sinclair explained that taxpayers who don’t agree with the estimated assessment are required to provide their supporting documents within 40 business days of receiving the notice.
However, in certain situations, if the taxpayer cannot submit the documents within the specified period, they are allowed to ask for an extension.
According to Charles de Wet, tax executive at ENSafrica, once a taxpayer submits their return and gets a verification letter, they usually have 21 days to submit the requested documents, and once they are unable to do so before the deadline passes, SARS will automatically issue the estimated assessment.
There is however a second deadline which is the 40 business days unless an additional extension is granted.
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Webber Wentzel consultant, Des Kruger, also mentioned the second deadline of 40 business days that the taxpayer had to ask for a reduced assessment.
He continued that if SARS doesn’t grant the request, the taxpayer is allowed to object and appeal the estimated assessment.
Speaking in agreement with Kruger, Aneria Bouwer, senior consultant at Bowmans, states that if after providing the relevant documents, SARS refuses to amend the estimated assessment, the taxpayer has the right to object.
She pointed out the ambiguity of SARS‘ notice, which states that the taxpayer will not be allowed to object, as an estimated assessment issued in terms of the TAA is not liable to objection.
She mentioned that the act only states that the assessment will not be liable to objection if SARS and the tax vendor agree in writing to a payable amount.
This means that in a case where the taxpayer provides the necessary documents and SARS refuses to review the assessment, the taxpayer is free to object.
She then advised tax vendors to pay attention to the timelines stated in the correspondence from SARS.
If they are unable to submit the relevant documents within 40 business days, they should ask for an extension and a suspension of payment.
According to Kruger, the main purpose of the VAT estimated assessment process is to ensure more timely compliance with SARS requests.