You can now be fined or jailed for small tax mistakes.
Inadvertent (unintended, unintentional, unplanned) tax errors – including not alerting SARS of a change in your personal details or failing to keep records from previous tax years – could potentially land you with a fine, or even jail time.
This is the result of an amendment to tax legislation that has scrapped the concept of “intention” from certain tax offences – this means prosecutors don’t have to prove that you wilfully broke the law, and the court can find you guilty of an offence even if you were negligent or made an unintentional mistake.
In the past, you could only be fined or imprisoned if you committed a transgression “wilfully and without just cause”.
This changed with the new law, which now lists a range of offences where intent doesn’t have to be proven.
Werksmans director Doelie Lessing says the new law split the existing list of non-compliance offences into two categories: one with offences which require wilfulness, where the heavier burden of proof falls on SARS, and the other, offences where “negligence” will be enough to trigger potential criminal liability.
Paradoxically, the latter list of offences is far less serious than the first.
Here’s a list of all the offences which could land you with a “criminal liability” – even if you did not commit them with intent.
- Failure to register for tax or to notify SARS of a change in registered particulars.
- Failure to appoint a representative taxpayer or to notify SARS of a change in representative taxpayer.
- Failure to register as a tax practitioner if required to do so.
- Failure to submit a return or document to SARS or the failure to issue a document to a person as required under a tax Act.
- Failure to retain records as required.
- Failure to comply with a SARS directive.
- Failure to furnish information or documents requested, excluding information requested for revenue estimations.
- Failure to give evidence when required.
- Failure to disclose to SARS material facts required.
- 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 by an employer to deliver to any employee or former employee any employees’ tax certificate or 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.
For all these offences, it won’t be sufficient for taxpayers to claim a defence of ignorance any longer. “Negligence” will now also trigger potential criminal liability, says Lessing
“The inclusion of the requirement of “negligence” (which is an objective test based on reasonableness), is an audacious move by SARS in that it enables SARS to broaden its non-compliance net in respect of less serious non-compliance offences to such an extent that even the slightest mistake could result in potential criminal liability and imprisonment.
“It is questionable whether it is reasonable for tax legislation to result in potential criminal liability of a taxpayer, absent the element of intent,” Lessing adds.
She warns that, now more than ever, taxpayers must ensure that they respond to any and all SARS correspondence as soon as required and register for tax if required.
Here are the offences which could give rise to criminal liability only if the taxpayer committed them with intent:
- Submitting a false certificate or statement in relation to returns, records and reportable arrangements.
- Issuing an erroneous, incomplete or false document.
- Failure to reply to or answer truly and fully any questions put to the person by a SARS official.
- Obstructing or hindering a SARS official in the discharge of duties.
- Refusal to give assistance during an audit or criminal investigation.
- Holding oneself out as a SARS official.
- Dissipating assets or assisting another person to dissipate assets in order to impede the collection of tax.
- Using any amounts deducted by way of employees’ tax for purposes other than paying it to SARS.
- Issuing documents purporting to be employees’ tax certificates if not an employer or authorised to issue.
- Declaring that the price chargeable in respect of supplies is subject to VAT, where in fact no VAT is payable or charging VAT in excess of the VAT properly leviable.
- Issuing more than one tax invoice, credit note or debit note in respect of a VAT supply.
“In our view it seems nonsensical and completely unjustifiable that SARS is required to prove the higher burden of “intention” in relation to more serious non-compliance offences (such as dissipating assets in order to impede the collection of tax etc.) before a taxpayer can be imprisoned, yet a taxpayer can potentially be imprisoned for merely forgetting to inform SARS of a change in registered particulars,” Lessing says.
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