SARS surety bond decision averts ‘potential disaster’

KEVIN MAYHEW SOUTH AFRICAN Revenue Service’s (SARS) decision to revise its initial decision - that called for surety bond levels to cover the whole VAT element of the Deferment Scheme - has averted a potential disaster. The new requirements become effective from April this year. Rina Belcher of specialist guarantor, Lombard Insurance Company, said the industry operated in a finely balanced credit environment and the facilities required to support surety bonds of the initial proposal covering the full VAT component would have derailed the balance. “The authorities have been sensitive to such issues and are to be lauded for taking a risk management approach which will not impact much on the current levels of the surety bonds,” she said. Surety bond levels will now be determined by issues such as accreditation status, financial strength, past compliance record, penalty history and the SARS track record of both the concern and its clients. Lower surety bond amounts will apply for lower risks and vice versa.