Active Criminal Cases
It has been reported that a 54-year-old medical doctor from the Eastern Cape, was arrested for numerous charges of tax fraud. According to the South African Police Service (SAPS), the investigations revealed that the accused prejudiced SARS by more than R1.8 million during the period between 2015 and 2018. The stated alleged offense by the accused is under declaring his income. Red flags were raised during an audit and a complaint was lodged with the Hawks for investigation.
In another matter, two suspects are to appear before the Bethlehem Magistrate’s Court on 18 September 2023, on alleged tax evasion charges which amounted to about R4 million. According to the SAPS, the matter was reported to the Hawks’ Serious Commercial Crime Investigation team based in Bethlehem, culminating in the summons being served.
Waiting for the Hawks and SARS knock on your door?
As SARS continues to scrutinise non-compliance, whether done intentionally or not; wrongfully, falsely or under declaring; under tax law means repercussions. While many taxpayers have slept peacefully in the past, foreseeing the worst that can happen is a slap on the wrist with some penalties and interest; a new Hawks / SARS prosecution strategy is a game changer.
With tax season well underway, taxpayers should take special care to make sure this tax return is done on a complete and correct basis. They should also carefully have a look at past disclosures in their tax returns and whether the numbers disclosed are correct and “everything adds up”.
The lifeline available
The Voluntary Disclosure Programme (VDP) offers taxpayers with skeletons in the closet an opportunity to voluntarily come forward to disclose their tax defaults to SARS. The programme also allows the disclosure of underdeclared income or understatement of any tax liabilities. Most importantly, a correctly obtained and SARS accepted VDP means that you cannot be criminally prosecuted.
While this lifeline remains available, there are, of course, legislative requirements one should meet when applying for relief under the VDP. For instance, an applicant should be a registered taxpayer with SARS, and be up to date with their tax filing obligations. The VDP process is also not as simple as many believe. There are a couple of cases where SARS have challenged a VDP obtained and won, as it was obtained with an irregularity or technical error when obtained.
Get a tax attorney in your corner
When approaching the VDP with a seasoned tax attorney, you have the advantage and umbrella of legal professional privilege. Additionally, you will have the means to successfully negotiate and navigate the SARS engagement aspect, which significantly increases the chances of a positive outcome. The process typically includes several steps, including a pre-evaluation to determine your suitability for a VDP and a post-submission process which correctly finalises the application. Whilst taxpayers can apply for the VDP via SARS e-Filing, there are nuances to the process that can be complex.
The market leading practice is that only admitted attorneys are allowed to deal with sensitive matters where privileged information is being shared. Any other tax advisor, including a CA(SA) or the most seasoned and well qualified tax professional, does not otherwise offer privileged protection. This is a protection that more sophisticated taxpayers should not gamble with. Where SARS throws the book at you, it often is a good idea to throw the book back at them.
Non Compliance Days – A question of “when”
A prudent taxpayer will always ensure that they correctly declare their income and keep the required documentation in order to discharge the burden of proof. Taxpayers who have possibly underdeclared/falsely stated as per the above instances, will appreciate it is a question of “when” and not “if” SARS will get their dues. For those who think they can escape tax by death, the new SARS AIT process and administration of an estate, places SARS in an even more powerful seat to collect their dues and with maximum tax penalties and interest.
The VDP process gives an effective roadmap and strategy in place to regularise your taxes and not take any criminal prosecution risks. However, the taxpayer must start this process on own initiative; as the VDP is not legally allowed once SARS is on your track.