SARS crackdown gets serious – with jail time and massive fines

Tax professionals warned taxpayers that the South African Revenue Service (SARS) and the NPA are teaming up to hand down harsher punishments for serious tax offences.

Tax Consulting SA’s Jashwin Baijoo said the Johannesburg High Court recently handed down a sentence of a cumulative 205 years behind bars to a “VAT Fraud Syndicate”.

Broken down, individual sentences ranged from 5 years to 65 years, for fraudulent VAT claims from SARS, estimated at over R200 million.

He said that while this is just one case, criminal convictions from SARS have been plentiful over the last few years.

These convictions stem from lifestyle audits, fraudulent return submissions, and anything else deemed a “serious tax offence”. 

A “tax offence” can take the form of any contravention of a tax act including the criminal offences specifically listed and in relation to taxpayer non-compliance.

“This may come across as quite broad, and perhaps that is the intention as taxpayers may face fines or even imprisonment for a wide range of contraventions,” he said.

Therefore, tax offences could include –

• Submission or issuance of false documentation or certification.
• Obstruction of a SARS Official in carrying out their duties.
• Failing to notify SARS of a change in registered details.
• Failing to submit a tax return or retain sufficient records.

“These strong statements on eradicating non-compliance by SARS may be perceived by the man on the street as a recent development, but criminal prosecution is something which has long been on the cards for the revenue collector and is simply now more public than before,” Baijoo said.

The NPA took its seat at SARS’ round table in 2003, by virtue of a Memorandum of Understanding (MOU). 

This MOU was updated in 2019, after which the barrage of criminal cases involving tax evasive manoeuvres fell into the realm of “public interest”.

Baijoo said one key point of the MOU is the NPA’s undertaking to establish a Specialist Tax Component.

This group’s role would be the prosecution of serious and complex, high-level tax offences, which the SARS/NPA team has made good on over the past few years.

He said that over the course of the years, since the “prosecution coalition” commenced, the tempo picked up, with successful prosecutions against both individuals and companies, ranging from account-draining fines to life-altering prison sentences.

“We have seen first-hand how both the fines and sentences imposed have escalated over time, with the NPA becoming almost surgical in its prosecutions, and fully utilising the lower burden of proof to seal convictions on tax-related offences,” he said.

“Now is not the time to take risks. SARS’ approach clearly shows we are dealing with a competent revenue authority, so why risk it when compliance is evidently the preferred way forward.” 

He said SARS’ efforts towards securing compliance show the revenue authority is steadily aligning itself with international standards and climbing back to its former prestige as one of the world’s finest.