Avoiding SARS-induced frustration owing to missing records

Author: Ian Hurst — Managing Director, Paymaster People Solutions

At Paymaster People Solutions, every month we reconcile our SARS payments in order to be sure that we have payroll deductions that match what appears on the SARS EMP201 document. This gives our payroll team the assurance that what was paid over to SARS was 100% correct.

The former process was simple

In the past on an ongoing monthly basis, when our team was certain that everything balanced for a particular reporting period, my payroll manager and I would proceed with a new round of admin checks for next calendar month. At this stage of the administrative process, we were easily able to assume that all the payroll-related tax matters for our clients was 100% in order. This was that ‘way it was back then’. There were no surprises from SARS.

The new ETI process presents challenges

More recently though, things have changed. The arrival of ETI claims has presented the Paymaster team with more complexity during the administrative process. What is causing all the alarm, is a minor clause stating that if an entity’s tax affairs are not in order, then this might result in an ETI-claim being disallowed. In theory this might sound like a fairly straightforward matter to contend with, but in practice this could well turn out to be an administrative nightmare! If your tax affairs aren’t up to date, you are in for a rough time. For example, if your ETI-claim for March 2016 was disallowed, then we would need to determine an interest calculation before being able to remedy the situation. Note: SARS calculates the interest and processes it via a journal debited to your SARS account. In this regard, all that I can say, is good luck to you if you are easily able to make sense of reams of journals as they accrue over a period of several months. Balancing ETI-related journals in a scenario like this takes a great deal of time and patience.

Troubleshooting the problem

The truth of the matter is that identifying the problem is the easy part. However, where the true challenge arises, is in finding out what the cause of the problem might be. Moreover, attempts to get SARS to re-allocate, or correctly allocate any further payments to the correct calendar period is where the true administrative challenge will lie. For example, if an incorrect calendar period is used, then all subsequent new journals for unallocated amounts will be automatically invoked by the SARS system —a domino-effect after a previously incorrect calendar period is balanced.

Case study 1 — an example of the frustrations which could arise

Some time ago, one of our clients attempted to obtain a SARS-issued tax clearance certificate. This wasn’t possible until an outstanding amount was paid, by our client, to SARS. Acting on our client’s behalf, in a bid to find the problem, we discovered that back in 2009, SARS had raised a journal entry for R4.50 (Yes! R4.50). Consequently, we contacted SARS. We were told to pay the money, upon which SARS said they would duly allocate the payment to the correct calendar/time period for the 2009 financial year. Paymaster paid the money.

The following day when we ran the transaction report, the R4.50 payment reflected on the records, but it showed up as an ‘unallocated’ amount. Immediately we phoned SARS to query the matter, upon which SARS duly reallocated the amount to the correct calendar period. Most frustratingly however, now that the 2009 calendar period was in balance, the SARS system created a new journal entry (for R37.50) for the 2012 calendar period. Aaargh, the frustration of it all!

In the end, the only true way in which Paymaster was able to resolve this particular matter, was for our client to make two visits to a SARS office and have a SARS consultant (eventually) sort it out for them.

Some two weeks later, our client (eventually) received their tax certificate, narrowly complying with a tender submission deadline (but, which could easily have been missed had the situation not been remedied in time).

Case study 2 — when you can prove payment to SARS

For this case study, suffice it to say that our client was informed that they owed SARS a payment dating back to 2009. No amount of polite discussion could convince SARS officials that the 2009 year fell outside of the 5-year limit for keeping employee records on file. Thankfully at Paymaster People Solutions, we never destroy payment or submission documents. We were able to prove to SARS that we had definitely made the payment for our client. Note — be warned: seemingly, SARS (with the intention of raising penalties and journals) continues to audit older calendar periods.

Case study 3 — a suggested intervention to avoid frustrations

In this final case study, our client wished to clear outstanding amounts for the 2016 and 2017 calendar periods. The clients made a payment directly to us and we paid SARS the outstanding money on behalf of the client. We then checked the statements for 2016 and 2017, and everything looked fine. The next day, to be absolutely certain though, I decided to double-check that there were no further outstanding amounts for earlier calendar periods. To my utter shock, I discovered yet another outstanding amount of R589.92 for the 2014 calendar period, despite the certain fact that about a year ago, my client’s statement showed up as ‘all clear’.

Therefore, to you the reader, my suggested intervention to help you avoid future frustration is this: obtain a full report from SARS e-filing for the past (at least) five years. Be sure to meticulously scrutinise this report (line-by-line) to make sure that everything is suitably balanced. Thereafter, on a three-monthly basis (i.e. every quarter) I suggest that you check your latest set of recent reports to be 100% sure that you remain in a state where everything is suitably balanced.

Are you unable to invest time to avoid similar frustrations? Let Paymaster do it for you.

At Paymaster People Solutions, we offer this service to all our clients — at a nominal fee of only R2500 for each business-entity that we investigate. Basically, the service you receive involves us inspecting the past five year’s SARS statements. We scrutinise them to make absolutely 100% certain that there are no hidden items causing problems. Once done, we will provide you with a full report detailing what we have found. Thereafter, for an additional R250 per quarter, we undertake to conduct routine quarterly inspections of your company’s reports. Where problems or issues arise, you will be informed (before they pop-up out of the blue and surprise you).

Why live with cause for frustration. Allow Paymaster People Solutions to take care of this administrative intervention on your company’s behalf — it may well save you many grey hairs in the long term.

Still unsure? For further information, please contact me, Ian Hurst, and I will gladly correspond with you if you need more information.