January marks not only the beginning of the new year but also, in our experience, sees an increase in audit findings issued by SARS. The reason for this, we can only speculate, is that March is the fiscus’ year end, fiscal targets must be reached and targets are more likely to be reached when additional assessments are issued. Given the fact that the Tax Administration Act, No. 28 of 2011 (“the TAA”) requires of SARS to allow a taxpayer 21 business days to respond to a letter of audit findings before an additional assessment can be raised (and therefore targets reached) following an audit, conscientious SARS auditors would try to ensure that the letter of audit findings is issued at the latest during January or the first week of February (failing to follow prescribed procedures under the TAA could render their assessment unlawful).
The point in time when SARS issues a letter of audit findings also marks the start of objection preparation. Whilst a taxpayer indeed cannot object to a letter of audit findings per se, the response provided to such letter will be crucial for the almost always inevitable, finalisation letter, additional assessment and objection to follow.
Part of the reason why we, at Unicus Tax Specialists SA, have a 100% success rate in tax dispute resolution (at the time of publication of this article) and why we have saved taxpayers millions in undue taxes, penalties and interest is that we understand the importance of the letter of audit findings and the response thereto. Too often we see that little heed is paid to SARS’ requests in a letter of audit findings, which is concerning (at least for most taxpayers) given:
- the marked increase in the quality of these letters; and
- the way in which SARS seem to nowadays bolster sophisticated legal arguments in support of their assessment to follow (even in some cases raising several legal arguments to support a single proposed adjustment).
Gone are the days where audit-stage engagement with SARS involved simply questions of fact by SARS, requiring simple factual responses by the taxpayer. ‘Tis is the season for taxpayers (and their auditors/accountants) to “fight fire with fire” and enlist an expert team of tax dispute resolution specialists. Failing to do so as soon as SARS issues their letter of audit findings (but preferably even sooner) could end up costing the taxpayer dearly.
You are invited to contact us for expert assistance.