Sloppy accounts and bad bookkeeping is soon going to be highlighted by the South African Revenue Service’s (SARS) new technology upgrades. Tax dodgers and those used to hiding their bottom line proceeds are also going to come under the spotlight. However it’s the average business that just hasn’t got their books in shape that are going to suffer the worst from SARS’s new IT systems.
New high-speed cross referencing
New high-speed cross referencing abilities mean that SARS can quickly and efficiently uncover if taxpayers mistakenly (or deliberately) hide details like shareholding on their tax submissions.
Artificial Intelligent uncovers errors
Artificial Intelligence (AI) can also be used to identify false submissions based on a model that identifies a pattern of tax evasion and highlights probable deceptive returns with great accuracy.
3rd party data exposes inconsistencies
SARS has also gained access to third-party systems like property and vehicle registries that highlight inconsistencies – like a tax payer that submits a modest tax return – while third party data reveals that they recently went on an exotic holiday, or bought a luxury vehicle. In addition SARS is now capable of seamlessly sharing data with authorities all over the world and can track hidden income offshore that should be declared under South Africa’s tax laws.
Negligence is seen in the same light as evasion
What is more worrying for many businesses who haven’t maintained their accounts and whose books are in disarray is the fact that the Income Tax Act now views tax payer negligence (even if it is unintentional) in the same light at tax evasion. Ignorance is no longer a screen that tax payers can hide behind. Some negligent errors or omissions on your business’s tax returns may now lead to criminal prosecution, with a fine or imprisonment of up to two years as a result.
In the past SARS had to prove intent – that the person or business was wilfully/intentionally omitting this information – however this is no longer the case. Some very common errors that may now lead to formal prosecution include:
- Failure to register your details with SARS or to notify them 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.
- 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 in order to give evidence.
- Failure to comply with a directive or instruction from SARS.
- Failure to disclose any material information to SARS or failure 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 tax debt and you fail to do so.
Submit your tax return with confidence
With the new tax laws and SARS’s upgraded IT infrastructure, businesses need to educate themselves on how SARS’s new technology can expose possible business negligence. They also need to be completely transparent in their declarations and deductions.
For expert assistance with your bookkeeping and submission of your tax returns, speak to our professional tax team today