sars ready to pounce when amnesty ends
21 May 2007

With the deadline for the small-business tax amnesty around the corner, eligible businesses should apply quickly or face the possibility of being prosecuted, warns David Knott, a fiduciary specialist of BoE Private Clients.

“We believe that the enforcement unit of the South African Revenue Service (SARS) is eagerly awaiting the close of the amnesty period, as they have identified several obvious businesses outside of the tax net they are keen to make an example of,” Knott said earlier this week. “There are certainly many that have not registered for tax or whose records do not reflect an accurate turnover.”

The small-business amnesty, available to businesses with an annual turnover of less than R10m, began on August 1 and will run until the end of the month. SARS is hoping to increase the pool of compliant businesses.

Businesses are required to apply for amnesty by making a full disclosure of their financial affairs. Sobantu Ndlangalavu, head of the small enterprise amnesty unit at SARS, said yesterday that 48611 businesses had applied to date. The unit was receiving about 1008 applications daily.

He said SARS had continued with its enforcement activities throughout the amnesty period. It had clamped down on businesses operating in KwaZulu-Natal, Cape Town and Eastern Cape. SARS had picked up “a lot of cases” of noncompliance where warrants of arrest had been issued but not executed for outstanding returns or money owed. Last month, warrants were consolidated and 12 people appeared in court in Gauteng.

Businesses failing to take advantage of the amnesty, and those that did apply but did not make full disclosure, would be liable for all taxes, levies and duties including penalties, going as far back as SARS might care, Knott warned. “Criminal prosecution may also result.”

Relief would not be granted to those businesses already under investigation, audit or other enforcement action by SARS. Neither would amnesty be allowed where this related to value-added tax not paid as a result of a false declaration relating to a fictitious transaction, or evasion.

Sanchia Temkin, www.businessday.com