VAT Vendors Be Warned As SARS Automates Its Systems

As of December 2023, the South African Revenue Services (‘SARS’) has begun to implement an automated Value Added Tax (‘VAT’) assessment system.

In essence, once a VAT vendor (‘taxpayer’) submits their return and gets a verification letter, they have 21 days to submit the requested documents. Where a taxpayer misses this deadline, SARS is now empowered to issue an estimated assessment automatically, without further input from the taxpayer. It must be noted that, in certain situations, if the taxpayer cannot submit the documents within the specified period, they may request an extension in terms of the rules set out in the Tax Administration Act, 28 of 2011 (‘TAA’).

Where a taxpayer disputes the assessment, they may request a reduced assessment and are required to submit all required documentation within 40 business days of receiving notice of the assessment. Extensions are available, but under specific conditions, and taxpayers may request a suspension of payment under certain circumstances. Where SARS denies the request for a reduced assessment, SARS, per their website, has stated that the taxpayer cannot dispute this decision. It is noted that there is no such prohibition in the TAA and arguably, the taxpayer may follow the normal dispute resolution rules, beginning with an objection.
 
In addition, the new changes affect the 5 year grace period tax payers are given to submit a request for correction. SARS has now stated that once the estimated assessment has been issued, the taxpayer will not be entitled to submit a request for correction for the same period.
 
Taxpayers are urged to pay attention to the timelines stated in the correspondence from SARS as well as that prescribed in the VAT Act and TAA.
 
According to SARS, this system aims to enhance tax compliance and streamline the VAT process. It must be stressed that these changes emphasise the importance of proper VAT compliance, significantly impacting how taxpayers manage their submissions and handle assessments. 
 
Should you require any assistance with your VAT compliance or have any queries in relation to the above or any other tax matter, please contact Evan Schutte at evans@nolandstax.co.za. Alternatively, contact your regional tax officer.

 
See notice here: https://www.sars.gov.za/latest-news/vat-enhancements-for-estimated-assessments/