Sars clamps down on VAT fraudsters

SA Revenue Service last week implemented a range of additional security measures to safeguard the VAT system from attempted abuse and fraud. These include more stringent verification of applications for VAT registration, investigations of existing VAT vendors who are under the turnover threshold, and a review of risk measures for refunds. “South Africa’s tax system is based on self-declaration and depends to a large extent on the integrity of taxpayers to make full, accurate and honest disclosure and pay all tax that is due,” a Sars spokesman explained. While the vast majority of VAT vendors are compliant, Sars reports a disturbing increase in attempted fraudulent registrations and other attempts to defraud the VAT system. These include vendors with turnover of less than R20 000 per annum who are registered for VAT despite being below the legislative threshold. “And we are seeing an increase in registrations by small businesses with zero or very low turnover,” he said. “In conducting follow-up verifications, we find that many VAT vendors cannot be traced using the contact details supplied and their business premises are fake or occupied by different businesses,” the spokesman added. Sars has therefore taken steps to secure the system from criminal elements and anyone within Sars colluding with them. “ Last week a VAT vendor was arrested by Germiston SAPS in conjunction with Sars for suspected VAT fraud. The suspect registered a company for VAT and submitted fraudulent VAT claims of R305 000 from February this year.” And over the past year a total of 29 Sars staff and their accomplices have been arrested and a further 41 staff members dismissed. To prevent future abuses, Sars has implemented additional registration checks including. Applications for VAT registration are now to be done in person or by a duly authorised and registered practitioner and applications must be accompanied by proof of ID, bank particulars and physical address of the business. Where necessary, inspections of business premises will take place to check trading activity before activation of VAT accounts. For existing customers, Sars will suspend the accounts of VAT vendors who have declared under R20 000 turnover for the past 12 months in line with legislation.