It's a criminal offence not to submit a tax return if you have to
Ten taxpayers have been convicted and sentenced since April for failing to submit outstanding tax returns. Fines ranging from R2 000 to R20 000 as well as admission-of-guilt fines have been handed down by the courts.
The South African Revenue Service (Sars) says it announced in April that it was embarking on an initiative with the National Prosecuting Authority (NPA) to enforce compliance by prosecuting taxpayers who have failed to submit their tax or VAT returns, after repeated communication with the relevant taxpayers did not yield the required results.
The taxpayers who have been convicted now have a criminal record, as it is a criminal offence not to submit a tax return within the prescribed time for any of the tax types a taxpayer is registered for in terms of the Tax Administration Act.
Since April, the NPA has issued 35 summonses to taxpayers and VAT vendors to face criminal charges relating to their failure to submit returns. To date, 10 cases have been finalised and 20 cases have been remanded after the first appearance of the relevant taxpayers in court. Some taxpayers have opted to make representations to the NPA.
An additional 24 cases have been handed over to the police for further investigation, while 25 cases are currently still under investigation by Sars for handover to the relevant authorities for further investigation and possible prosecution.
The courts have issued three warrants of arrest to taxpayers who failed to appear in court after being summonsed to face criminal charges for non-submission of tax returns.
Jean du Toit, attorney at Tax Consulting SA, says that the initiative to close more criminal cases does not represent a widening of Sars’s’ powers, as it has always had the discretion to do so. What it does illustrate, she says, is Sars’s no-tolerance policy on outstanding returns.
While the threat of a criminal record and a fine ought to serve as sufficient incentive to submit one’s return, Du Toit says it is worth pointing out that submission of returns also gives you access to the Sars’s voluntary disclosure programme (VDP), “which affords acquittal from far more serious criminal sanctions”.
She says Sars allows you to avoid criminal prosecution and regularise your tax affairs by making a disclosure under the VDP, of which the benefits include:
- Remittance of 100% of understatement penalties;
- Remittance of 100% of administrative non-compliance penalties; and
- The “clean” transfer of foreign funds back to South Africa.
The VDP, however, comes with an important caveat, Du Toit says, which is that taxpayers only have access if they do not have any outstanding returns. Your VDP application will be rejected if you have outstanding returns, she says.