Webber Wentzel participated in the SARS' Voluntary Disclosure Programme Feedback Survey for 2020 on Friday, 19 June 2020. This was an interactive opportunity to engage with SARS regarding the issues advisers experience daily with the current Voluntary Disclosure Programme (VDP) process.
SARS' VDP process is a legislated means for taxpayers to voluntarily approach SARS to regularise their tax affairs and pay additional tax to SARS where they made a default. A default may arise where incomplete/inaccurate information has been submitted to SARS or where a taxpayer has failed to submit relevant information to SARS. The default must result in an understatement of tax payable to SARS. The VDP process presents a unique and useful means for SARS to increase collections as taxpayers are voluntarily offering to give SARS additional money and this should be capitalised on.
The opportunity to provide feedback to SARS and the efforts made by the VDP Unit to engage with taxpayers and practitioners was valuable. The person tasked with the job of overhauling the VDP process, Nicholas Nemalili, will hopefully be able to sweep clean and resolve the numerous issues facing the VDP process and VDP Unit to the best advantage of the fiscus.
Some of the key concerns discussed by Webber Wentzel and other participants in the survey were:
- significant and persistent delays with processing of VDP applications. The current, average turnaround time is 201 working days;
- the need for further clarity from SARS in the form of an interpretation note and a comprehensive update on the existing guide to the VDP process;
- the VDP Unit's inflexibility on questions of interpretation;
- a heavy-handed approach to processing VDP applications e.g. the threat to impose penalties on a taxpayer if that taxpayer proposes to withdraw from the VDP process before signing the VDP agreement;
- unreasonable deadlines to respond e.g. within five business days, regardless of the months of silence before a VDP assessor responds, if at all, to queries, comments or the provision of additional supporting information. This is compounded by the unsympathetic stance taken towards requests for extensions;
- difficulties securing payment arrangements; and
- a dwindling appetite for taxpayers to enter into the VDP process.
What was clear from the survey was that it was understood that SARS must prioritise clearing the processing backlogs on pending applications and that an enhanced, "taxpayer-friendly" approach, within the existing framework, was required. Also, that the policy approach on VDP applications needs reconsideration, particularly on the remission of interest in certain circumstances, and the possibility of submitting an objection against interest imposed by SARS.
Webber Wentzel continues to engage with the VDP Unit to find practical solutions to these issues and to make submissions on draft legislative documents.