Estimated Assessments | VAT Enhancements

SARS has implemented comprehensive enhancements to the VAT system, aiming to improve compliance and simplify the estimated assessment process. These updates are particularly significant for vendors navigating the requirements of the Tax Administration Act. This article provides an in-depth overview of the updated procedures, including the relevant SARS guides and VAT217 notices.

What Are Estimated Assessments?

An estimated assessment is raised under section 95(1)(c) of the Tax Administration Act when a vendor fails to provide requested material during a VAT verification process. These assessments are now managed with improved tools and procedures to enhance transparency and efficiency.

Key Features | VAT Enhancements

• Estimated VAT201 Returns are displayed on eFiling for vendors to review.
• Vendors can submit supporting documents for VAT217 and VAT201 directly via the VAT Work Page on eFiling.
• Correction requests can be made for non-disputed returns.
• Extensions to submit relevant material are now supported through the VAT Work Page.
• Notifications and detailed assessments (VAT217) are provided on eFiling, streamlining the process.

Understanding VAT217 Notices

The VAT217 notice is a critical document outlining the details of an estimated assessment. It serves as a revised assessment issued by SARS after reviewing or auditing the submitted VAT201 return. Vendors must carefully review this notice and take appropriate actions within the specified timeframe to avoid penalties or disputes.

Submission and Correction Options

• Vendors can upload supporting documents via eFiling, SARS branches, or the SARS Online Query System (SOQS).
• The "Submission of Relevant Material" button on VAT217 notices simplifies the process of uploading required documentation.
• Correction requests are available using the existing eFiling process, provided they do not pertain to disputed estimated assessments.

Request for Extension

Section 95 amendments now allow vendors to request extensions for submitting relevant material. Key points include:

• Extensions can be requested for up to five years plus 40 business days after the original assessment date.
• Required fields: Reason for extension, detailed description, and new submission date.
• Once approved, further extensions for the same period are not allowed.
• Failure to request within the allowable period renders the assessment final.

Suspension of Payment (SOP)

The SOP function enables vendors to request a temporary suspension of payment obligations arising from estimated assessments. This option is available under the following conditions:

• The SOP request must be submitted within 40 business days of the VAT217 notice.
• It applies only to assessments resulting in outstanding amounts.
• Failure to meet deadlines for SOP requests or extensions results in the assessment becoming final.

Procedures from SARS Guides

GEN-ELEC-04-G01 | Guide for Completing VAT201

The GEN-ELEC-04-G01 guide outlines the process for requesting extensions and submitting corrections:

• Fields required for extension requests: Reason, detailed description, and extended submission date.
• Errors in submissions are flagged with detailed messages, providing guidance on corrective actions.
• Confirmation notices are issued upon successful submission of requests.

GEN-PEN-05-G02 | Guide for Submitting Disputes

The GEN-PEN-05-G02 guide details the dispute process, including SOP requests and objections:

• The SOP functionality is available via the "Dispute/Suspension of Payment" tab on eFiling.
• Dispute requests must specify tax type, period, and reasons for suspension.
• Supporting documents must be uploaded before submitting SOP requests.
• Outcomes are communicated through correspondence available on eFiling.

Compliance Timeline and Messages

Important Timelines

• Submit relevant material within 40 business days of receiving a VAT217 notice.
• Request extensions within the allowable period to avoid finalization of assessments.
• Complete SOP requests within 40 business days for valid assessments.

Messages | Displayed and Error

• "Request for Extension can no longer be submitted as the allowable days to file the request has lapsed. Therefore, the Estimate Assessment issued to you for the tax period is now considered final"
• "Please note that the request for extension date selection must be between 40 business days from the date of assessment and must be within 5 years from date of assessment"
• "The request for VAT201 cannot be processed as allowable period to submit VAT201 return after estimate has lapsed"
• "The deadline for submitting the relevant material has lapsed. Your request cannot be processed. Therefore, the Estimated Assessment issued to you for the tax period is now considered final"
• "The deadline for submitting the relevant material has elapsed. You can however request for an extension. Should your request for an extension be approved, you will be allowed to submit the relevant material"
• "Reason For Extension Not Allowed: The Request For Extension Previously received is under review and SARS will communicate the outcome of the request"
• "Section 95 (a) or (c) Issued – Dispute not available for this assessment and Suspension of Payment not available as request is outside permissible time period to submit return or relevant material. Please request for Extension to submit return or relevant material and if approved then reapply for Suspension of Payment"
• "Section 95 1 (a) or (c) issued – No dispute items found and Suspension of Payment not available as the request is outside permissible time period to submit return or relevant material and Request for Extension period has lapsed"
• "Section 95 (a) or (c) issued – No dispute items found and suspension of Payment not available as Assessment is a nil or credit assessment. Request for Suspension is only available if you have an outstanding amount as per assessment"
• "Please Note: Suspension of Payment reason must be supplied for Tax Period:YYYY"
• "Dispute items have not been selected for all disputed periods. Please click on OK if you wish to proceed with captured items, or click CANCEL if you wish to complete the dispute itemd for the relevant tax period(s). Note: If the dispute items are not completed for all tax period(s) then such tax period(s) will not form part of the dispute"

Conclusion

These enhancements to the VAT system simplify compliance for vendors but impose strict deadlines and responsibilities. Familiarizing yourself with the updated processes, including VAT217 notices and SARS guides, is essential for avoiding penalties and ensuring smooth tax administration.

DISCLAIMER

Nothing in this article and/or post should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure accuracy, Tax A Sured (Pty) Ltd does not accept any responsibility for consequences of decisions taken based on this article and/or post. It remains your own responsibility to consult the relevant primary resources when taking a decision.