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Thread: Coming Clean with SARS

  1. #1
    Platinum Member Neville Bailey's Avatar
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    Coming Clean with SARS

    I know someone who has been trading as a plumber for the past 7 years ago or so, as a sole proprietor.

    He immigrated to South Africa from Zimbabwe just before he started trading here, and has since obtained South African citizenship and he has a South African ID book. He is about 50 years of age.

    However, he has never registered as a taxpayer nor has he registered for UIF and WCA (he has about 4 employees, one of which has worked for him for the past 5 years).

    He now finds himself in a situation where is no longer getting plumbing contracts on development sites because he is not registered for WCA, and is losing quite a lot of business as a result.

    Before he can register for WCA (or UIF for that matter), he needs to register as a taxpayer.

    Therein lies the rub...

    He is petrified that, if he registers as a taxpayer, he will expose himself to scrutiny by SARS and could be held liable for huge amounts of unpaid taxes, penalties and interest.

    What are his options, and what is SARS likely to do if he registers as a taxpayer now?

    His bookkeeper has suggested that he reinvent his plumbing business as a "new" business, register for tax in the business name and in his personal capacity and, if questioned by SARS as to how he survived financially prior to starting his business, he could say he was a "kept" man since immigrating from Zimbabwe. I am not too sure whether this strategy will shield him at all.

    I look forward to hearing your opinions.
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  2. #2
    Bronze Member dfsa's Avatar
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    Why should he be shielded? It is people like him and 100ds of thousand exactly like him that is the reason my taxes are so high. He traded just like the rest of us, he generated income just like the rest of us. He had the benifits of trading just like the rest of us, but he did not pay his dues like the rest of us. You will most probebly find that his employees are getting a 1/4 of the rate they should get.

    SARS are useless, but I am sure if he go to them and explain to them he is now a citizen and he want to come clean. They most probebly might give him some fine, but as long as he is honest they will assist him to do fair repayments.

    His book keeper should be penalized too for doing his books knowing that he do not pay his taxes.

    I am sorry, I simply can not handel dishonest people. After rates & taxes many people suffer to get by. This guy just take it because he is under the radar.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Neville Bailey View Post
    His bookkeeper has suggested that he reinvent his plumbing business as a "new" business, register for tax in the business name and in his personal capacity and, if questioned by SARS as to how he survived financially prior to starting his business, he could say he was a "kept" man since immigrating from Zimbabwe. I am not too sure whether this strategy will shield him at all.
    Probably his best shot, really. It's that, or claiming a relatively trivial income in the "informal trading" sector.

    Unfortunately the plumber has missed the penalty and interest amnesty that was on offer recently, so the stakes are probably pretty high. Given that a "coming clean" amnesty deal has recently expired, I suspect SARS will be pretty intolerant just at the moment.

    It might also be an idea to close all existing bank accounts, open new ones at banks he hasn't been with before, and use those for the tax registrations. Depends what has been going through the existing accounts, I guess.

    Quote Originally Posted by dfsa View Post
    Why should he be shielded?
    I hear where you're coming from, but life isn't fair, I'm afraid.

    The pragmatic upside is he'll be joining the ranks of taxpayers for the future. Put too big an obstacle in the way, and it'll never happen.
    The trouble with opportunity is it normally comes dressed up as work.

  4. Thank given for this post:

    Chrisjan B (26-Jun-12), Martinco (27-Jun-12)

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