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Why SARS won’t give your money back - experts

By Danielle van Wyk

The South African Revenue Service (SARS) says it is confident about the probe being conducted by the Tax Ombudsman, Jude Bernard Ngoepe into their systems. The investigation was authorised by Finance Minister Pravin Gordhan, who has criticised the restructure of the tax authority by commissioner Tom Moyane.

“SARS can confirm that the Deputy Minister of Finance, Mcebisi Jonas, has informed SARS that permission has been granted to the Office of the Tax Ombud to investigate SARS’ systems,” stated the tax authority.

The investigation follows on a series of complaints that SARS have been delaying the payment of refunds. SARS has that there are no problems with their refund processes and systems and refuted the claim that they were holding onto money to improve their tax collection numbers.

“SARS would like to place on record its full support of the investigation by the Tax Ombud.  Given the recent narrative about the issue of refunds, we are confident that the results of this investigation will provide the South African public with the requisite confidence in the SARS’ systems,” added SARS.

Experts, however, are adamant that the process this year seems to be a lengthier one.

“It does appear that there are some refunds which are taking longer to be paid out. This seems to be due to lengthier audits of taxpayer information and stricter requirements on verifying supporting documents submitted by the taxpayer. There did seem to be an increase in the number of taxpayers required to verify themselves and their banking details at SARS branches than last year which added to the refund processing time,” stated Marc Sevitz from online tax calculator Tax Tim.

While the Revenue Service highlighted the fact that they would fully comply with the investigation, they said that they were currently still waiting on Ngoepe to reveal the terms and conditions of the probe.

Expert weigh in

“Much of the current taxpayer complaints pertain to VAT refunds. It must highlighted that SARS has an obligation to ensure both service and compliance which includes complying with the legislation and ensuring that all incorrect activities are managed correctly which could include fraud. Due to an increase in fraud, SARS has had to react by tightening up our Risk Rules.  Despite such actions SARS has only referred 11% of cases for detailed audit. Regarding Personal Income Tax payments of 98.2% is paid within (72 hours),” SARS noted.

However tax services providers have a different story to tell.

“When we do the paperwork for our clients, we only supply documents and claims that we are 100% certain are correct and above question. SARS then ‘find”’ something wrong, even though there isn’t any. Then, by their definition, they have refunded every ‘correct’ claim, but they have rejected claims and created a problem that shouldn’t have existed in the first place. So they are being disingenuous. They reject valid claims and then state that they have paid all correct claims, but our claims were not incorrect in the first place,” explained Paul Slack from Fasttrac financial services.

Where VAT refunds are concerned, Slack accounts for having clients that SARS owes hundreds of thousands of rands for six months plus. “Firstly, the VAT system is supposed to work that you pay over what you collect and deduct the VAT you pay. Where you are due a refund, it is your own money you are supposed to get back. I have two clients in the process of going under because we can’t get their own money back. It should be illegal for SARS to hang onto money that technically belongs to someone else,” Slack added.

The same problem applies to income tax, added Slack. “They reject every single cent of expenditure on personal taxes for no reason and then demand the money, which is not due, from my clients. When we object they tell us we should have appealed. So we appeal and they tell us we should have objected. And this goes round and round ad nauseum. I have some like this that we have been fighting for two or three years. You can’t tell me that every cent claimed was 100% wrong. And the Tax Ombud can’t do anything about these.”

All the extra time spent fighting on these spurious issues is not recoverable from the clients and they aren’t interested in this kind of explanation, Slack highlighted. “The frustration levels among the client base is extreme – and the decline in tax morality is frightening.”

The revenue service’s Sandile Memela spoke to EWN : “Much as we are accused of massaging the statistics that highlight the effectiveness of our systems, we stand by them.”

Though SARS deny any foul play it is no secret that they have had to tighten their belt this financial year to accommodate a R30 billion revenue shortfall.

“As we know South Africa is under considerable fiscal strain and so we need to be able to collect revenue efficiently. I support any restructuring of SARS that ultimately results in that goal of efficient revenue collection, quality services and assistance to the taxpayer and a fair and reasonable process when it comes to tax collection and interaction when dealing with taxpayers,” Sevitz concluded.

 Handy tip: For any tax related queries, get in touch with Tax Tim through Justmoney, today.

 

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