Deal with that SARS letter now

There are serious implications for ignoring a letter of demand from SA's revenue service.

- By Neesa Moodley

It's that time of year again — tax-filing season and there's nothing that can light a fire up your butt quite like a letter of demand from the South African Revenue Service (SARS).

When it comes to letters of demand, the onus is on you to be aware of the timelines and to check your SARS profile. SARS typically uploads the letter of demand on your eFiling profile and, provided you have updated your contact details, it also sends an email or SMS notification.

“Unfortunately, many taxpayers only realise they've received this when their bank account is already frozen or their salary garnished,” says Razael Manikus, chief operations officer at tax advisory business Latita Africa. “At that stage it’s very serious, but you can still solve the problem by acting immediately.”

What is a letter of demand?

It’s a formal notice issued when SARS believes you owe tax. Often this debt is due to incorrect IRP5s or third-party data mismatches; unclaimed deductions not reflected correctly (such as medical aid or retirement contributions); undisclosed investment or rental income; penalties on late submissions or underpayments from previous years; or reversed refunds after a SARS audit.