As a business owner, have you ever failed to comply with certain SARS requirements, knowingly or unknowingly? Or have you ever had to pay penalty fees to SARS for negligence such as late submissions or late payments? The repercussions of such offences are set to become much more onerous now that new tax legislation has amended the element of “wilful conduct” in certain non-compliance matters.
What business owners previously viewed as small tax offences, could now be a potential criminal liability. Before the latest tax amendment legislation became final, taxpayers could only be liable for a fine or subject to imprisonment if the relevant tax offences were committed “wilfully and without just cause”.
Both tax practitioners and civil society voiced their dissatisfaction against the proposed amendments. Concerns regarding the removal of the element ‘wilfulness’, meant that any taxpayer who now made unintentional mistakes would no longer be protected against criminalisation. This is because under the proposed amendments SARS is not obliged to prove intention, before finding a taxpayer guilty of non-compliance offences.
However, the final amendment legislation that was passed, did not do away with intent entirely. A differentiated approach has instead been adopted, resulting in two separate categories of non-compliance offences. The first category consists of offences which require wilfulness, whereby SARS is in charge to show proof of the conducted offence. Whereas the second category consists of offences in respect of which “negligence” will suffice to trigger potential criminal liability.
Here are some examples of the offences that SARS now classifies as criminal negligence, even if the taxpayer did not commit them with intent:
- Failure to comply with tax payments including third party payments.
- Failure to comply with withholding tax obligations when required.
- Failure to issue any employees’ tax certificates or to notify SARS of having ceased to be a registered employer.
- Failure to submit provisional tax estimates.
- Failure to comply with the payment of VAT on imported services and otherwise.
- Failure to submit VAT returns and special records.
- Failure to include VAT in the advertised or quoted price or failure to separately indicate the VAT exclusive price and the VAT inclusive price.
- Failure to keep sufficient records as required.
As a taxpayer, using ignorance to defend your wrongdoing will no longer be accepted by SARS. It is not only regarded an insufficient defence, but “negligence” will now also lead to potential criminal liability.
Therefore, it is crucial to ensure that you are always tax compliant to avoid potential cases of negligence. SARS appreciates if you respond swiftly to all correspondence and register for tax if you are required to do so.
If you are unsure of your tax position it is advised that you make the relevant enquiries with SARS. You can also contact Anthurico for professional advice regarding any tax related matters including how to reduce your chance of unintentional negligence.