IT14SD - Yet another reconciliation coming from SARS

[Dave A]

I've received this news from The South African Institute of Tax Practitioners.

28 March 2012

Notice: New VAT IT14SD Returns

The South African Revenue Service (SARS), recently introduced the new Supplementary Declaration (IT14SD) returns in an attempt to enhance tax compliance by Companies and Close Corporations through the verification and reconciliation of the various declarations made to SARS.

The IT14SD is intended to reconcile financial information across Pay As You Earn (PAYE), Income Tax, Value-Added Tax (VAT) and Customs tax types.The form requires the reconciliations to be accurate to within R100. It has to be completed and submitted within 21 days.

The return requires taxpayers to reconcile and substantiate the differences between the following:

- Turnover as disclosed per the IT14 to the value of supplies as disclosed per the VAT201 returns;
- Cost of Sales as disclosed per the IT14 to input tax claimed as disclosed per the VAT201 returns;
- Salaries submitted as per the EMP201 returns to salaries disclosed as per the IT14 return;
- Accounting profits and losses and tax profits and losses;
- Exported sales value per Custom declarations and export sales as disclosed per the IT14 and VAT201 returns; and
- Importation values per Custom declarations and imported costs as disclosed per the IT14 and VAT 201 returns.

Taxpayers who are eFilers and who have been identified for verification will receive an initial verification letter which will be displayed on their eFiling profile. The form will automatically be available for completion and submission. Taxpayers who are not registered for eFiling will receive the IT14SD by post along with the initial verification letter.

The IT14SD can be submitted through one of the following channels:

- Filing: If you are a registered eFiler you will be able to log into eFiling, complete and submit the declaration;
- SARS branches;
- Drop boxes at SARS branches; and
- By post.

However, SARS encourages taxpayers to complete and submit their IT14SD electronically via eFiling. This will ensure faster processing of returns, the ability to submit supporting documents, track returns and refunds, and request the revision and adjust returns electronically.

Taxpayers are advised to keep track of differences between their accounting and tax records and to reconcile these differences in order to assist with the completion of the IT14SD return.

[Dave A]

I don't know if anyone has picked up on this bit:

The return requires taxpayers to reconcile and substantiate the differences between the following:

- Cost of Sales as disclosed per the IT14 to input tax claimed as disclosed per the VAT201 returns;

Seems a bit of a questionable excercise to me. In most instances (particularly in the service industry) there's going to be a substantial difference which would take quite a lot of effort to substantiate.

Or am I misreading the complexity of doing this element of the recon?

[Lynda]

Oh gosh, what next? Makes one wonder if it's worth trying to build on a business. I see in the one section it says :
"Taxpayers who are eFilers and who have been identified for verification will receive an initial verification letter which will be displayed on their eFiling profile. The form will automatically be available for completion and submission. Taxpayers who are not registered for eFiling will receive the IT14SD by post along with the initial verification letter."
My question is... where on my eFiling Profile do I look for this letter that I may or may not receive? I've just been into eFiling and can't seem to find where they would display it. Does an alert come up when I log in? Help, please!!!

[Dave A]

Lynda, my experience is you get an email notification whenever a return is uploaded on eFiling. I'm sure the same will happen with this too.

[Lynda]

Thanks, Dave. I hope they do!

[geraldenek]

the recon is very similiar to all the worksheets done by accountants and auditors to compile the financials - so the info would be available from them.

[Dave A]

Obviously Output VAT figures should reconcile to financial statement figures without too much fuss and that's a common test in audits.

However, the VAT recon worksheets I've seen don't reconcile the Input VAT claimed against the cost of goods sold though
And unless I'm missing something, for good reason - it's unlikely to reconcile without some pretty serious, in-depth analysis.

You're going to have to look at changes in stock levels, hunt down all the unregistered vendor transactions...
And then what about the perfectly legitimate Input VAT claims that are not posted as cost of sales? Advertising spend, stationery etc.

[Robyn2012]

Hi

We received an email from SARS efiling saying that we must complete an IT14sd return. How do we get the return to complete it? It is not on our efiling and we have made numerous calls to SARS to ask them how we get the IT14sd and the people at the call centre do not seem to know what is going on and they all give us different advice, none of which helps. We submitted our tax return last Friday and then received this email from SARS on Saturday. Does it take SARS some time to generate this return as a pre-populated return on our efiling?

Do you have any advice to give us?

Thanks

Robyn

[CLIVE-TRIANGLE]

It is not pre-populated.

It normally appears on your tax work page or whatever they call it. It appears instead of an IT34, or below the IT34. This after a couple of days.

It is a rather simplistic reconciliation, but one that will age you overnight.

It is a return devised by a dunce that has little clue of matters accounting.

Have fun.

[Dave A]

It is a rather simplistic reconciliation, but one that will age you overnight.

It is a return devised by a dunce that has little clue of matters accounting.

Have fun.

I see in the minutes of a recent meeting between SARS and employer representative stakeholders, SARS concedes there are problems with the IT14 reconciliation.

No doubt there'll be changes eventually, but in the meantime we're expected to carry on regardless

[Lynda]

Hi All, I've just printed the SARS "Guide for the Completion and Submission of Supplementary Declaration (IT14SD) form - eFiling" guide. Under 2.2. Step 1 it reads "Click on "Returns" and select "Returns Issued" and just below "Returns Issued" select "IT14/IT12TR/IT12EI" under "Returns History". A history of the Company/Close Corporations's returns will be displayed"..... my question is: do I click on the Returns Issued or do i click on the Returns History section????

[Lynda]

very difficult to comply with all these requirements when the horse is still in the paddock!!!!! None of us want to be fined for not complying but as Robyn2012 says that when phoning in to find out how to go about complying even the staff at the gov dept don't know what we're talking about. Just had the same story trying to register my new domestic lady (sent off all the forms and have been following up for 3 months now)... eventually am registered but now I need advice on how to go about backdating the payments... very frustrating!

[Dave A]

Just had the same story trying to register my new domestic lady (sent off all the forms and have been following up for 3 months now)... eventually am registered but now I need advice on how to go about backdating the payments... very frustrating!

If that's for UIF, just go with the annual payment option.

[Lynda]

Thanks, Dave, good idea, one less stress

[Francois Potgieter]

Hi dave,

Recently found a great product that does the indepth audit on financials. In large it reconciles input vat claimed against thecost of goods sold. It does the analytics and results in exception reports of items that does not reconcile and you need to have a look at...

https://www.cqs.co.za/vatcm