SARS Penalty & Interest Negotiation
Understanding SARS Penalties
SARS imposes penalties to encourage taxpayer compliance. These typically fall into two categories:
- Administrative Non-Compliance Penalties: These are fixed-amount penalties for failures like the late submission of a tax return. The amount is based on your taxable income and can recur monthly for as long as the non-compliance continues.
- Understatement & Late Payment Penalties: A percentage-based penalty is levied for the late payment of taxes (typically 10% of the amount due) or for understating income.
While interest on late payments is a statutory charge that is rarely waived, administrative and late payment penalties can be successfully challenged if the correct legal process is followed.
- Reasonable Grounds: This is a key legal standard. It means you must prove that circumstances beyond your control rendered you incapable of complying. A “reasonable person” in your situation would have also been unable to comply. This is not a simple excuse; it requires substantial proof.
- Exceptional Circumstances: These include events such as:
- A serious illness or accident affecting you or a close family member.
- The recent death of a family member responsible for your tax affairs.
- A natural disaster, fire, or theft that destroyed your records.
- A proven, serious error on the part of SARS itself.
- First-Time Offence: In limited cases of minor, administrative non-compliance, SARS may agree to remit a penalty if you have an otherwise perfect compliance history.
- Factual Investigation: We conduct a thorough investigation into the timeline and circumstances of your non-compliance to identify valid, defensible reasons for a waiver that align with the Act.
- Evidentiary Support: A successful application requires proof. We guide you in gathering the necessary documentation (e.g., medical records, death certificates, police reports, correspondence) to build a robust, evidence-based case.
- Legal Argumentation: Our tax specialists and lawyers draft a formal submission that argues your case within the specific language of the Tax Administration Act, referencing the correct legal grounds and precedents for remission.
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