[Question] VAT - Penalties

[Simbonile]

Hi Guys

I have a client whose VAT returns have been outstanding for about 4 years. I have submitted these and I have included the 10% penalty in all my submissions as well as the applicable interest (per interest rate tables). My understating is that this is a case of “Voluntary disclosure before notification of audit” by SARS. Does this mean “0% penalty”?
Should I write to the Penalties committee at SARS to see if the penalty portion on these VAT returns can be written off?

Thank you for assisting me in this regard.

[CLIVE-TRIANGLE]

I don't think that will be successful

Before an entity can apply for VDP the following requirements must be met:

1 Only voluntary disclosure will qualify. An application brought after a taxpayer becomes aware of a pending audit or investigation will not be valid, as it would be deemed not to be voluntary, but rather involuntary, due to the fear of exposure and prosecution because of non-compliance being revealed during the investigation.
2 The non-compliance must not previously been disclosed to SARS or known to them, such as outstanding returns which SARS is already aware of.
3 The disclosure must be entirely complete in all material aspects.
4 The disclosure must relate to an offence where an understatement penalty may potentially be levied by SARS.
5 The non-compliance must not create a refund due by SARS.
6 The application must be done on the approved forms, the form must be fully completed and the correct channels must be used.
7 The tax payer must be registered for eFiling before an application for VDP can be made, as the VDP form can only be acquired through eFiling.

So, it is there to assist you when you discover that you have previously provided incorrect information. In any event, you would escape prosecution but still be liable for administrative penalties.

[Simbonile]

Thank you very much Clive for the insight