Is it just SARS sharpening its teeth, or is this an assault on taxpayer rights?

Is it just SARS sharpening its teeth, or is this an assault on taxpayer rights?

Business, Legislation, Tax

Proposed new legislation seeks to put additional pressure on taxpayers to ensure the accuracy of their tax submissions. Section 34 of the Draft Tax Administration Laws Amendment Bill, 2020, proposes to amend Section 234 of the Tax Administration Act, which will remove the concept of willfulness (“intention”) from the range of acts that constitute an offence under the Tax Administration Act.

It would mean that you could be guilty of an offence if you neglect to, for example, notify SARS of a change in registered details (addresses, contact numbers, bank accounts, email addresses and public officer), respond to a request for documents or information from SARS late or not pay taxes when due.

Other common problems that could result in punishment include:

  • Supporting documents being misplaced, or clerical errors, which result in adjustments to VAT or PAYE returns by SARS.
  • Late payments of VAT or PAYE by taxpayers due to banking cut-off challenges or pay late due to an error in interpretation of a payment cut-off date.
  • Taxpayers being unaware of a potential tax liability due to ever changing and complex legislation, and such liability being paid to SARS late.

SARS is currently able to impose penalties on taxpayers for such contraventions, so the question that needs to be asked is why these additional measures are necessary. The answer to this is the explanation provided in the Draft Bill. The ‘requiring proof of intention’ in terms of a taxpayer’s action appears to be a sticking point to SARS. This makes prosecution for non-compliance difficult. Remove this hurdle and SARS can prosecute at will.  The proposed change, if passed, will provide SARS with an additional weapon with which to force taxpayers to comply with their filing and payment obligations. So, will ‘intent’ be a mitigating factor of any sort? The concern to tax practitioners and taxpayers alike is that SARS will use a heavy-handed approach to dealing with inadvertent errors in an attempt to improve tax collection. Whilst honest taxpayers have no problem with SARS using legislation to tackle serial tax offenders, it would not be fair and equitable if honest taxpayers who had genuinely made a mistake became collateral damage on this battlefield. It is hoped that sanity will prevail here and that a more measured approach is followed