011 615 3245/68

Tax ombud finds SARS employs delaying tactics

September 7, 2017
Pfumo Tax and Accounting
8/31/2017
Edition 8

 

Tax ombud finds SARS employs delaying tactics

Treasury’s
Investigation by Judge Bernard Ngoepe discovers complaints about VAT refunds are justified

 

The investigation by Tax Ombud Judge Bernard Ngoepe into the alleged delayed payment by the South African Revenue Service (SARS) of VAT refunds has found the complaints are justified.

The report identified several mechanisms that SARS has used to delay the payment of tax refunds and has further urged the tax authority to terminate them while at the same time acknowledging that these methods had been employed to combat fraud in some instances.

“It is clear that the system allows for SARS to unduly delay the payment of verified refunds to taxpayers in certain circumstances. This has become a systemic issue.

“The system does not sufficiently protect taxpayers. The removal of the obstacles would go a long way

towards addressing the problem,” the judge said in his conclusion.

Judge Ngoepe’s investigation was prompted by the sharp increase in the number of complaints by taxpayers, who in some cases said the practice of delayed refunds caused them serious cash flow problems, especially in the case of individuals and small companies.

These complaints have been forthcoming over a number of years, having been raised in several annual reports of the tax ombud. They reached a peak in the period December 2016 to March 2017.

The complaint by taxpayers was that SARS employed certain mechanisms to unduly delay, or even avoid, paying out refunds due to them. They argued that the tax collection system was being implemented unfairly by SARS, resulting in financial hardship and in some cases the near collapse of their businesses and job losses. The judge noted that in some cases, the financial hardship was drastic.

For example, the report criticises the placing of “stoppers” to halt the payment of refunds every

time a new return for the next period was filed. “The system blocks already verified refunds the moment a subsequent return is submitted by the taxpayer. Therefore, even where specific returns are not identified for audit/verification, the mere submission of the next return results in the payment of the refund being stopped. This may have a knock-on effect, especially in the case of VAT where the periods for declaration are close to each other,” the judge says in his report. “SARS should keep to time frames, so that a refund is paid out before being overtaken by the next submission. In any case, [legally] SARS … is not entitled to secure a hopeful debt out of a next return by withholding a refund which is already due.”

Professional associations complained that the lifting of “special stoppers” took unduly long, sometimes more than two months, which the report said was a justified complaint.

The judge identified various other mechanisms SARS used to delay payment, such as the need to verify bank details in person at a


SARS branch. Even when these requirements were complied with, refunds were not forthcoming. Another cause of delays was the failure to link submitted documents to the main file held by SARS.

DA deputy finance spokesman Alf Lees said his party would propose legislative amendments to ensure refunds were paid out without delay.

Lees said the findings of the report contradicted the assurances given by SARS

commissioner Tom Moyane that there were no undue delays in the payment of refunds.

 

ensorl@businesslive.co.za

 

This months Featured Customer of the month is…

Pfumo Tax and Accounting Services (Pty) Limited!

TWhen running your own business it’s easy to get bogged down with doing the many things that you need to do such as Accounts and VAT returns. But it isn’t always necessary for you to do everything yourself. Sometimes it’s better to focus on what you do best and what earns you income and let others do what they do best. So don’t get all tied up doing business admin, let Pfumo help make things a little easier for you.

Give us a call today on 011 615 3245, or visit our website @ http://www.pfumo.co.za you’ll be so happy you did.

Services offered by Pfumo are:

Accounting & Bookkeeping

  • Full Bookkeeping Function
  • Monthly Accounting
  • Trial Balance Preparation
  • Monthly Processing and Reconciliation of Bank, Customers, Suppliers and Petty Cash
  • Annual Financial Statements

Tax Services

  • E-filing
  • VAT Returns
  • PAYE Returns
  • Provisional Tax Returns
  • SARS Audit Assistance
  • Annual Tax Return

Payroll Services

  • Monthly Payroll Preparation
  • Salary Payments via EFT
  • Process and Issue Pay slips
  • Compile and Submit PAYE, SDL, UIF Returns
  • IRP5 Returns
  • Leave Administration

Did you know?

Pfumo is a proud supporter of ‘Stand with Stan’.

A charity dedicated to providing prosthetic limbs to those who can’t afford them.

Stan is looking for donors to commit to as little as R50-00 a month to assist in returning mobility to someone less fortunate.

If you think you can help, please contact Stan on the below details:

Email: info@standwithstan.co.za
Web: www.stanandrews.co.za

NB. Thank you to all those that have responded thus far and for your generous pledges and donations!

Don’t forget your 30 seconds fix!

 

30 SECONDS…

 

Check your Spam inbox

This month Pfumo is busy implementing a new software system that will vastly enhance and improve our automation of services and will update you, our valued customers, every step of the service we provide.

As with all implementations of this kind, a phased approach is being undertaken to ensure we can continue to deliver services while moving our clients over and adding them all to the new program.

Accordingly, we ask that you regularly check your spam folder as we have experienced some instances where the new process has been seen as spam.

Last month we migrated our Provisional Taxpayers over, and we will keep you up-to-date as we progress.

 

Pfumo Tax and Accounting Services (Pty) Limited is a proud member of Business Networking International, Legacy chapter.

http://www.bni-jhb.co.za/bni-johannesburg-north-bni-legacy/index.php