The South African Revenue Service (SARS) is currently on a major tax compliance drive and taxpayers and their practitioners are feeling the pressure. However, system failures, delays with refunds and communication overload then sudden cessation are causing frustration for taxpayers, tax practitioners and SARS alike, says Phillip Joubert, Manager for the Centre for Tax Excellence at SAIPA.
Due process for tax practitioners
The 2021 tax year has come to an end, and it truly does seem that SARS will continue throwing us with curveballs, with a number of changes predicted to be implemented in the upcoming filing season, and until that is confirmed, practitioners will need to remain diligent and agile in their engagements with both SARS and their clients.
Taxpayers have to get into the habit of keeping their supporting documents and to provide them well in advance of the submission date for tax returns. SARS is relying more and more on third party data and tax practitioners need to know their clients in order to pick up any data anomalies. This can prevent understatement penalties and other issues later. It is also up to the tax practitioner to train their clients on best practice, as this will save all parties from a lot of frustration later.
A number of SAIPA members do not have a proper engagement letter in place, which is in essence a contract between the practitioner and his client stipulating what each one’s responsibilities are. It is there to protect both the practitioner and the taxpayer.
“We also advise tax practitioners to do a “due diligence” on new clients, even if it is a quick search to pick up any negative information that may make them uncomfortable dealing with the company or individual’s tax affairs.”
Online query management and practitioner complaints
SARS does boast with an online query management system and the ability for tax practitioners to log queries on eFiling. However, feedback on the efficiency of the system has not been good.
“Practitioners are either getting no response, incorrect responses or responses that are not related to the query at all.” A lot of the frustration can be attributed to both SARS and practitioners not following due process. The administration of tax practitioners is not always up to date and SARS’ IT-system remains a “big work in progress,” says Joubert. SARS is dealing with a legacy system and a new system, and as they merge the two something gets fixed while something else gets broken.
Tax practitioners frequently complain to their Recognised Controlling Bodies (RCBs) that SARS is drowning them in correspondence, yet offers receive little guidance on what is expected of them. Sometimes there is a tax reference number that can be matched to a taxpayer, but in other instances there is only a transaction reference leaving the practitioner in the dark as to who it belongs to. There was also a period where communication from SARS to tax practitioners ceased, while the taxpayer received all the correspondence, causing great amounts of confusion.
Another issue for many practitioners is the turnaround time on feedback from SARS on queries, verifications and audits. SARS does not always stick to their Service Charter and members face frustration in continuous follow ups with inadequate response. “The internal process at SARS to escalate taxpayer issues was quite lengthy. Recent changes did bring some relief,” says Joubert. Tax practitioners now have direct access to regional stakeholder teams through their RCBs which has sped up the process. “SARS is aware of the issues, and they are trying to resolve them. We do continue to advise SARS on these issues through various mechanisms at our disposal.”
Tax practitioners need to ensure that their own tax affairs are up to date, as well as any company related to them. They have to be in good standing with SARS and their RCB.
“We want tax practitioners to treat their own practice as if it is a client. They should be putting the same amount of care into their own affairs as they do for their clients. You sometimes need to work on the business and not just in the business”
Practitioners who are not in good standing with the tax authority have 60 days to rectify the issues or they will be deregistered from SARS as a practitioner. This is not a position anyone wants to be in.