Many tax practitioners and their clients will find themselves on the wrong side of the Receiver of Revenue as the final date to submit tax returns passed on Friday.
Tax practitioners have faced big delays because of major technical glitches with the e-filing system, while individuals are being asked taxing questions as the South African Revenue Service’s (Sars) third-party verification system comes into force.
Although individuals had until February 29 to submit their tax returns via e-filing, tax practitioners only had to have 75% of clients’ returns in, with the rest submitted by March 14. However, as one accountant puts it, “there is no way we can meet the deadline”. It is not clear whether it is the accountant or the client who will face the penalties for late filing.
Tax practitioners say that the eÂfiling system has been chaotic. First of all, accessing clients’ files is difficult, with the system often not working or otherwise extremely slow. “Yesterday I could not get into the system at all: it would load 75% of the form and then fall down,” says one tax practitioner who asked not to be named.
He adds that when he could access forms, it took 30 seconds after entering each character to update, which meant it took hours to complete a single tax return.
Another accountant says he could not access files. In February he had employed teams of people to input data who mostly sat on their hands. He adds that even if the returns had been entered or had been submitted manually, they were showing in the system as still outstanding, which means he could face penalties.
Another major issue has been the mismatching of information submitted when compared to the third-party information held by Sars. As this is the first year that taxpayers do not have to submit supporting documentation; Sars has relied on information such as IRP5 certificates and medical information provided by third parties. In many cases clients have either submitted the wrong information or the third party has sent updated information to Sars that was not supplied to the taxpayer. There have also been situations where Sars has inputted the information incorrectly.
The mismatching issue has resulted in many taxpayers being requested to resubmit their returns. When the information is requested, though, Sars does not specify which data is incorrect and so the taxpayer has to complete the whole form again. Taxpayers are also receiving notification from Sars that they owe additional taxes but, again, with no specification of why this is being charged.
Tax practitioners also discovered that some of their clients were loaded under other accountants’ profiles or they had clients listed on their profiles which did not belong to them.
“I had three taxpayers who … were loaded under another accountant and I had to get his authority to change them back even though I have been doing their books for six years,” says one accountant who asked not to be named.
He also discovered that several of his clients’ companies, some with turnovers as high as R12-million, had been listed as dormant on the system. “I had to prove that they had submitted their 2006 tax return and that it had been received by Sars before they would reinstate them”.
Another tax practice says there have been major problems with transferring clients from other accountants during the year, which has also resulted in late tax returns.
A Sars spokesperson responds, “Until recently, there was a manual process to transfer taxpayers and errors did creep in from both parties. We recently introduced an electronic process to allow for the transfer of taxpayers between practitioners, which has vastly reduced the time involved and the occurrence of errors”.
However, this system was only implemented towards the end of February and a former accountant has 20 days to respond before the profile can be changed. This made it too late to meet the 29 February deadline. The question is whether Sars will admit to these complications and extend the deadlines.
At time of printing, Sars had not replied to specific questions relating to the e-filing problems.