Given the variety of fraudsters and chance-takers in as we speak’s market, hesitancy on the a part of the South African Revenue Service (Sars) is current and well-understood. Rather than merely handing out refunds to each Vat claimant with out cautious scrutiny, the Sars official appointed to the matter is obligated to appropriately apply the regulation, although it might take just a little longer than anticipated.
These delays skilled could even be due to an absence of supporting documentation on the a part of the taxpayer.
This is putting immense monetary pressure on the enterprise fraternity, and with some companies, we have now seen that this comes all the way down to survival, particularly when the verification interval of 21 days has been exceeded and the matter remains to be not finalised.
A steadiness must be struck
It can definitely be seen as affordable the place Sars carry out the right checks and balances and comply with due process in confirming the correctness of Vat claims, earlier than merely paying them out. It is, nevertheless, unreasonable that many companies face monetary uncertainty and liquidation as a consequence of long-drawn-out verification processes, taking longer than the respective 21 business-day interval.
Various situations which lead to unpaid Vat refunds
There are three situations which we have now famous that leads to unpaid Vat refunds after the submitting of a Vat return, being:
- Sars disallows a taxpayer’s enter Vat declare;
- Sars places the taxpayer via the verification course of, requesting sure documentation and a Vat schedule, which the taxpayer then offers, after which thereafter hears nothing from Sars as to the cost of the refund; and
- The credit score sits on the taxpayer’s assertion of account and no refund is acquired.
Verification course of
Should Sars disallow a taxpayer’s enter Vat declare, the taxpayer should then interact Sars via the formal dispute decision course of by submitting a dispute/objection.
Should Sars choose a taxpayer for verification, the taxpayer is required to offer Sars with the extra data inside the 21-day interval. The failure of Sars to pay the refund for a tax interval inside an inexpensive time could also be justified, as Sars needn’t course of a refund till such time because the verification of the refund happens.
Sars should maintain the taxpayer knowledgeable and supply the taxpayer with a report indicating progress made throughout the verification course of.
You can count on cost of refunds above R100 inside 7 enterprise days of finalising the verification course of.
Taxpayer’s recourse
There are sometimes no ample causes given by Sars for the delay within the refund being processed, and such is indicative of Sars’s conduct as mentioned within the Tax Ombud’s report, the place it was discovered that:
“1.3. A number of complaints that the payments of refunds were unduly delayed were justified; the refunds could and should have been paid earlier. In such instances, no satisfactory explanations were given by Sars for the delays.”
Should the taxpayer:
- a)have supplied Sars with the requested supporting documentation and the 21-day verification course of has lapsed; or
- b)have a credit score reflecting on their assertion of account and no refund is paid out by Sars;
Then, the taxpayer could don’t have any various however to take applicable authorized steps with the intention to receive the refund legally resulting from them.
Solutions for taxpayers
The Sars dispute course of generally is a very time consuming, costly and irritating train however does present the mandatory recourse when adopted appropriately. This is the place correct planning and data of the principles for dispute decision underneath the Tax Administration Act improves the chance of a constructive consequence considerably.
Businesses are subsequently inspired to hunt strong help from a supplier with a robust tax and authorized part when structuring their dispute, in order that they proceed strategically with the dispute decision course of from the outset.
We have seen in observe that the place the right course of is adopted, Sars stays amicable to partaking with the taxpayer and making certain refunds are paid timeously.
Andre Daniels is legal supervisor: tax controversy and dispute decision at Tax Consulting SA.