The South African Revenue Services (SARS) has published a notification around the mechanisms they use to verify and audit corporate income tax submissions.When a taxpayer submits an annual tax return, that submission is either accepted and assessed or provisionally assessed and selected for audit.

Whether or not a tax return is selected for audit is based on an internal risk model which is used by SARS. Should a corporate tax return be selected for verification and audit, further information is then requested from the taxpayer.

Since 2011 SARS has made use of the IT14SD reconciliation to perform an initial verification of submitted tax returns, which were selected for audit.

The form would require the taxpayer to perform a three-way comparison, between value-added tax, employees’ tax and income tax. Typically, SARS would make further inquiries based on any variances or discrepancies identified by performing this comparison.This method of verification will change from 17 September 2022.

Taxpayers will no longer be requested to submit this reconciliation. The requirement for the IT14SD will be replaced by a request for specific, relevant material which will be determined using a risk-based approach.

Failure to respond to such a request timeously or to resubmit the ITR14 tax return, where relevant, may result in an additional assessment raised by SARS.

To avoid a situation where assessments are raised without the taxpayer’s knowledge, we advise taxpayers to ensure that contact information on e-filing profiles are accurate, especially if your local PKF office is not responsible for your e-filing profile.

Should you be contacted by an agent from SARS requesting information, obtain the contact information of the person making the inquiry, and contact your local PKF office for support with the process. Please do not share any information unless the individual is confirmed to be a SARS employee.

Author:
Herman Nieuwoudt CA(SA) RA
Partner
PKF(VGA)
Herman@vg-a.co.za

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