Sars looks into inconsistencies in imposition of penalties

SA REVENUE Service is not taking lightly accusations of inconsistency in the discretion applied by branches in the application of penalties. “Sars is currently investigating the purported inconsistencies with a view to identifying appropriate mechanisms to monitor this aspect,” Sars spokesman Adrian Lackay told FTW last week. The issue has long been a point of contention in the industry. “Agents want clarity on what the penalty infringements are and what methodology Customs uses in arriving at the level of penalty. Our problem is the inconsistency and the fact that we don’t know upfront what we will be penalised for,” an agent told FTW. “If we had the facts at our fingertips and we could brief our staff, this would help considerably with training,” she told FTW. “The Penalty Guideline is an internal policy document intended to provide officers with guidance regarding the category of the offence committed and the appropriate amount to be deposited in terms of section 91 of the Customs and Excise Act in respect of that offence,” Lackay told FTW. “This ensures that clients at all branch offices are treated uniformly when a penalty is imposed. And after the client has deposited the required amount, the Commissioner then has the discretion to decide whether any part or the whole amount deposited is payable as a penalty – and the client has an opportunity to appeal the decision." A Johannesburg-based agent told FTW that there appeared to be a vagueness in the application of penalties. “In Durban, for example, under-declarations attract a 10% penalty, but in Jo’burg it’s different.” He did however concede that the introduction of the Alternate Dispute Resolution system was a fair means of challenging decisions that were seen as unfair. SA Association of Freight Forwarders executive officer Chris Richards believes it would be useful to know the guidelines. “It’s unfortunate that they’re not published, but there may be good reasons for that,” he told FTW. And the fact that penalties are subject to the discretion of particular Controllers is not a negative in Richards’ view. “Surely it would be less beneficial for Controllers to apply blanket penalties regardless of the values involved,” he told FTW. And he believes that the industry often tends to lose focus of the positives when it comes to Customs issues. “Forwarders tend to focus on the last massive penalty they may have picked up rather than on the fact that the Controller’s discretion possibly worked in their favour on previous occasions. “A court has discretion, a judge has discretion and every forwarder has the right to query a penalty. Although the ADR process may be cumbersome, the facility is available,” he said. Clearly the best course of action is to avoid penalties, and Sars is more than happy to consult with agents in advance to assist in ensuring compliance, says Riaan de Lange of consultancy Tariff and Trade Intelligence. “Sars puts out external policy manuals on its website which provide good guidelines for facilitating compliance. “And from a Customs and Excise compliance point of view, Sars essentially focuses on three main issues. First is the tariff classification which applies to the importer and the manufacturer of excisable goods. Second is the valuation and third the origin requirements or rules of origin. And you can get rulings from Sars on these issues.” The problem, says De Lange, is that companies often try to structure their businesses around the prevailing dispensations which may open them up to scrutiny. “Clients are well aware that with every transgression of the law, there is the possibility of a penalty being logged against them,” said Lackay. “Traders know upfront what their compliance requirements are and it is incumbent upon the client to ensure that their staff is adequately trained and that they need to know the law in order to comply. There is no way a penalty can be avoided if you transgress and therefore the client should ensure that their submissions are quality controlled.”