Written by Debora Motana, MaxProf Auditor
The purpose of the Tax Administration Act is to ensure the effective and efficient collection of tax. This section gives SARS the authority to choose a taxpayer for a process checking accuracy. The Tax Administration Act increased SARS’s information gathering powers.
The basis upon which a person may be selected for an inspection, verification or audit is prescribed as either on a random or a risk assessment basis. This must not be confused for criminal investigations, which are triggered by indications of the commission of an offence under a tax Act.
Taxpayers may be selected randomly based on a spot check.
Selection for inspection, verification or audit.
A person/taxpayer may be selected by SARS for inspection, verification or audit based on any consideration relevant for the proper administration of a tax Act, including on a random or a risk assessment basis.
Selection for inspection, verification or audit.
What is verification:
Verification entails the evaluation of the taxpayers’ records.
Verification means SARS checks information that the taxpayer gives or declares in a tax return. This information is compared against third party data, financial and accounting records, and other supporting documents. This assists SARS in ensuring that the taxpayer’s declaration or return is fair and accurate, through verification. After the declaration has been submitted, SARS can randomly decide to verify these documents based on the submitted information.
What to do if or when selected for verification?
You will receive a SARS Official letter notifying you that you have been selected for verification. A due date will be stipulated on the letter and the documents requested.
After being selected for a SARS verification:
- You need to review the SARS Verification Letter
- Gather and submit the supporting documents:
- Input and Output schedules
- Tax / VAT Invoices
- Bank Statements
- Accounting records
- Agreements or contracts relating to the taxable supplies
You must respond with the indicated timeframe, via e-Filing or the SARS Online Query system.
If in disagreement with the results of the verification process, the taxpayer can dispute the findings of the SARS’s verification.
What is an Audit?
An audit is a deeper investigation into the taxpayers’ financial affairs/records to determine if your tax position was correctly declared. It is a detailed check on the correctness of the VAT returns submitted and the payments made to the taxpayer.
SARS will normally select to examine a few periods, and the relevant materials may be obtained from third parties and the vendor.
You will be notified by a SARS official as and when an audit needs to be conducted on the risk profile of the taxpayer. The scope of the audit will also be communicated in the first notification received from the auditor.
During an audit, please read your Notification of Audit letter and note the contact details of your SARS auditor.
- Upload all material requested in your letter (a link will be available once the Audit Letter has been sent)
When in need of help, it is important to call the auditor mentioned in the Notification of Audit letter for assistance.
Conclusion: The responsibility to prove the correctness and validity of uploaded documents lies with the taxpayer.
Selected for SARS verification or audit? Don’t navigate it alone. Contact MaxProf for expert support.
