Failure to register your details with revenue service Sars or not notifying it of changes to your details could result in up to two years’ imprisonment, says Tax Consulting SA.
Roxanna Naidoo, an attorney, and Lisa Mihalik, the tax and legal administrator, both of Tax Consulting SA, said a new set of law amendments, signed by President Cyril Ramaphosa and promulgated on January 20, has granted Sars the legal firepower it needs to impose criminal sanctions on taxpayers who neglect their tax affairs.
“Before the promulgation of the Tax Administration Laws Amendment Act, 2020 (Amendment Act) a mistake made by a taxpayer was only a crime when it was committed “wilfully and without just cause”. In other words, the law required an element of intent; where negligence or ignorance caused your administrative non-compliance, you would have gotten off with a slap on the wrist.
“Henceforth, your intention does not matter — where you “negligently” fail to comply or make certain mistakes on your taxes you commit an imprisonable criminal offence,” the company said in a statement.
Specialist firm Tax Consulting SA said the Amendment Act just demonstrates that the new Sars commissioner and its Treasury team have adopted a no-nonsense approach to non-compliance.
“Given how easily and how often these mistakes can happen, and how hard they will be to correct, taxpayers should exercise extreme accuracy and vigilance when filing their taxes. It may serve you well to appoint a qualified tax consultant or experienced tax attorney to ensure you do not end up on the wrong side of these new rules,” Tax Consulting SA said.
The firm said a defence commonly used by taxpayers — ignorance — will no longer fly as Sars will from now on hold individuals to a higher standard of care.
“Strategically speaking, this is a bold, brilliant move from the Sars-Treasury team, as the simple inclusion of the word “negligence”, now allows for the offence criteria to be broadened to such a degree that even the slightest mistake made in one’s compliance could result in criminal prosecution,” said Tax Consulting SA.
The firm has highlighted 11 mistakes listed in the Amendment Act that can result in up to two years in prison.
Eleven mistakes not to make to avoid two years in prison, according to Tax Consulting SA:
- Failure to register your details with Sars or to notify it of any changes to your details;
- Failure to appoint a representative taxpayer or to notify Sars of such appointment or a change in representative taxpayer;
- You receive compensation for assisting someone with their taxes and you fail to register with Sars as a tax practitioner;
- Failure to submit a return when required to do so;
- Failure to retain all relevant substantiating records;
- Failure to provide any information as and when requested by Sars to do so;
- Failure to appear and comply when you are requested by Sars to attend a meeting or a hearing to give evidence;
- You are issued with a directive or instruction by Sars and you fail to comply with it;
- You fail to disclose any material information to Sars or you fail to provide Sars with any notification as required under any tax act;
- You are notified by Sars to pay an amount on another taxpayer’s behalf in settlement of a tax debt and you fail to do so; or
- You have a withholding obligation and you fail to withhold or deduct the tax correctly and pay it over to Sars.