[Question] Penalties, Interest & Tax -- from May 2008 now only brought to light by SARS

[nichoalscfm]

Hello everyone

Recently, we were contacted by a friendly fellow from SARS.

Informing us that monies were due to SARS for a return submitted in May 2008.

Basically a payment for PAYE was made on a Saterday, all those years back, and now SARS have come to the "party" so to speak.



What notification period is SARS required to give in terms of late payment of PAYE? (if any)

Do we have any leg to stand on to appeal the charges, or should we cough up and pay?

Many thanks for any input.

[Dave A]

If it's prescription you're hoping for, the prescription period is 15 years on taxes by the looks of things.

If it is the only blemish, you could file an appeal for leniency on the basis that you were unaware that a Saturday was not regarded as a normal business day by SARS. I don't know what your chances are with SARS in its current mood, but if you don't ask, you don't get.

[BusNavig8]

A few issues:

Was the "Saturday" an out of timeframe day?
Were you issued with Statements of Account since this date - Sars still have to comply to certain other Acts in this regard to bring to your attention that this amount was due and payable.

Were your addresses always correct with SARS?

Have you pulled a Statement Of Account on the PAYE dashboard and does it actually reflect there?

Are there any unallocated payments ?

Interest is of no consequence as the monies were paid (assuming they were paid within a reasonable time after due date of payment)

Remission of the Penalty and interest should be applied for in this instance even though it is within the prescription period, but keep in mind that a remission is not an excuse for not paying the due amount and it is a lengthy procedure so I would complete an ADR for it (Alternate Dispute Resolution). Dont tel a SARS official complete it, the motivation needs to be right. I will assist you if you would like. (I have varying degrees of movitations!)

[Dave A]

7th June 2008 was a Saturday.

I got caught like this once myself years ago, except it was for VAT

And as for notices from SARS about it, I only discovered it a couple of years later when I happened to apply for a tax clearance. Given the fairly urgent need for the certificate, I just coughed up

The job was worth it though

[BusNavig8]

Well if the 7th was the Saturday and it was due on the 6th, then the interest due would be for 1 day only in any event and the 10% penalty will stay 10% and not accrue any interest. So it really depands on the amount that was due. Requiring a clearance certificate is a different matter altogether due to the urgency due to the need to have one. VAT is also treated much more strictly than the other taxes.

[nichoalscfm]

Thanks for your response.

1.) Concerning the Saturday, it was on the 7th, i guess you could say out of frame day. As SARS say that if the payment due date falls on a holiday or weekend, it should be paid the day before this. (i.e. the 6th)

2.) No Statement of Account has been issued since this date.

3.) The Addresses are correct with SARS.

4.) A pulled a PAYE statement middle of last week -- and true as bob, all is reflected there.

5.) Payment was only made, a day late. As the MD "assumed" that the 7th is classified as a business day.

6.) No unallocated payments are on the statement of account

Can we still complete an ADR for remission of Penalty and Interest?

[Dave A]

Well if the 7th was the Saturday and it was due on the 6th, then the interest due would be for 1 day only in any event and the 10% penalty will stay 10% and not accrue any interest.

Not quite. SARS applies payments received to penalties and interest first, and then only to the tax owed. So there'll be 10% plus a touch more incurring interest charges for over 3 years just at the moment.

Can we still complete an ADR for remission of Penalty and Interest?

Absolutely!

[BusNavig8]

Not quite. SARS applies payments received to penalties and interest first, and then only to the tax owed. So there'll be 10% plus a touch more incurring interest charges for over 3 years just at the moment.


Absolutely!

Didnt know I had to be so technical!

I was referring in line with the thread in terms of an ADR. The basis in which the objection committee will make its ruling on whether there was a loss to the fiscus and how much was that loss. In this case it was merely a day and then compound interest from there. The fact that penalties and interest are first taken into account is a given as that is the practice at SARS, it will not be the basis of the motovation.

Actually any objection/ADR process can only be done within 3 years from the date the assessment was issued. Therefore a motivation as to why it was outside of this timeframe will also have to be made ( Being why I asked the questions in my earlier posting)

That is why I offered to assist. If there is one thing I know its SARS procedure and systems.

[Dave A]

Didnt know I had to be so technical!

I have to nudge those finer technical points out of you somehow

[flaker]

on a similar note where Dave implies that any taxes owed to SARS cannot be pescribed for 15 years, will this also be threw for municipal rates (sometimes referred to municipal rates & taxes)?

[Dave A]

The 15 year prescription period applies to

any debt in respect of any taxation imposed or levied by or under any law;

so I expect municipal rates is included under that.

[nichoalscfm]

Didnt know I had to be so technical!

I was referring in line with the thread in terms of an ADR. The basis in which the objection committee will make its ruling on whether there was a loss to the fiscus and how much was that loss. In this case it was merely a day and then compound interest from there. The fact that penalties and interest are first taken into account is a given as that is the practice at SARS, it will not be the basis of the motovation.

Actually any objection/ADR process can only be done within 3 years from the date the assessment was issued. Therefore a motivation as to why it was outside of this timeframe will also have to be made ( Being why I asked the questions in my earlier posting)

That is why I offered to assist. If there is one thing I know its SARS procedure and systems.

I would greatly appreciate your assistance in this regard... any fee involved?

[BusNavig8]

Im a tad confused about this 15 years or the 30 years - this taken from the Prescription Act 68 of 1969 as amended:

11 Periods of prescription of debts
The periods of prescription of debts shall be the following:
(a) thirty years in respect of-
(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
(iv) any debt owed to the State in respect of any share of the profits, royalties or
any similar consideration payable in respect of the right to mine minerals or
other substances;
(b) fifteen years in respect of any debt owed to the State and arising out of an advance
or loan of money or a sale or lease of land by the State to the debtor, unless a
longer period applies in respect of the debt in question in terms of paragraph (a);
(c) six years in respect of a debt arising from a bill of exchange or other negotiable
instrument or from a notarial contract, unless a longer period applies in respect of
the debt in question in terms of paragraph (a) or (b);
(d) save where an Act of Parliament provides otherwise, three years in respect of any
other debt.

Which way do you interpret it to be ?

[BusNavig8]

I would greatly appreciate your assistance in this regard... any fee involved?

Nah, Love me job! would be pleased to help, you just need to do it with haste! PM me

[Dave A]

Im a tad confused about this 15 years or the 30 years - this taken from the Prescription Act 68 of 1969 as amended:

11 Periods of prescription of debts
The periods of prescription of debts shall be the following:
(a) thirty years in respect of-
(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
(iv) any debt owed to the State in respect of any share of the profits, royalties or
any similar consideration payable in respect of the right to mine minerals or
other substances;

30 years on taxes it would be, then.

I was relying on a post about prescription here. I suspect copy and paste problems.

Given the search popularity of that thread, I think I'm going to take the liberty of correcting the post.