Voluntary disclosure programme plagued by delays?
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Money Web Tax 24 June 2011
SARS responds, explains why this is not the case.
Having heeded the call for a Voluntary Disclosure Programme (VDP)
from SARS many companies are yet to receive any proactive responses or
information on the status of their submissions.
Over the last few months starting in November 2011 we have made
several online submissions to SARS on behalf of our clients, the last
form of communication received was a short automated acknowledgement of
the application with a reference number. Other than the acknowledgement
no other feedback has been received nor have any of the applications
been finalised. This gives the impression that there is a lack of
urgency when dealing with VDP matters.
The current legislation dictates that SARS must provide the specified
relief if an individual or company comes forward and makes a valid
disclosure and concludes a voluntary disclosure agreement with SARS.
However, the relief may be withdrawn if, subsequent to the conclusion of
the agreement, it is established that the applicant failed to disclose a
material matter. Additionally, there is no guarantee that SARS will not
target the company in future.
It is this uncertainty and lack of communication which has left
clients feeling very uneasy with the whole programme. Clients believe
that they have inadvertently exposed themselves to an audit by SARS.
In contrast the exchange control tax clearance programme, which was
put into effect at the same time as VDP, been extremely effective with
over 80% of the submissions put forward completed timeously.
This observation leads us to believe that there is no sense of
urgency from SARS side when dealing with VDP claims and we would urge
SARS to make this matter a priority.
Despite the delays in the VDP system companies and individuals should
still take advantage of the open window which SARS has created. Many
companies may not be aware of having defaulted in the past. The
programme will allow them to start on a clean slate with a clear
understanding of their tax status with SARS and is particularly
important with the implementation of the Companies Act which makes
directors directly liable for such tax transgressions.
*Elriette Butler is an associate director at BDO.
SARS's response
The Voluntary Disclosure Unit of SARS was established in 2010 to
administer the tax leg of a joint SARS and Reserve Bank voluntary
disclosure programme that ends in October 2011. The programme is aimed
at taxpayers who wish to regularise their tax affairs.
The comparison that BDO in Voluntary disclosure programme plagued
by delays has drawn between SARS and the Reserve Bank is inappropriate.
Since its establishment the SARS VDP Unit has received in excess of 20
times the number of applications received by the Reserve Bank. Although
the unit has already processed many more applications than the Reserve
Bank has received, there is always room for improvement. To accommodate
the higher volumes of applications, SARS is continually expanding its
operational capacity, with further system enhancements being introduced
in the last week of July 2011.
SARS reiterates that VDP applications are processed in isolation
from the normal operations of SARS. The unit is administered as a
separate unit in SARS, and has separate systems and processes to capture
VDP agreements. Information submitted in respect of an application is
not shared with or used by the rest of SARS for audit purposes. The many
taxpayers who have signed VDP agreements with SARS know this. This also
applies in the case of applications that did not qualify for relief.
Tax practitioners are welcome to visit the Unit and inspect its
facilities.