A SARS site visit or audit can be a stressful experience for South African taxpayers, whether individuals or businesses. Proper preparation is key to ensuring a smooth audit process and minimizing potential issues. This detailed guide provides a comprehensive checklist to help you get ready for a SARS site visit or audit, covering documentation, communication, and compliance best practices.
What is a SARS Site Visit or Audit?
SARS may conduct physical site visits or audits as part of its compliance enforcement to verify tax returns, assess risks, and investigate discrepancies. These can be routine or triggered by specific concerns such as unusual transactions, late filings, or third-party information.
Preparation Checklist for SARS Site Visits & Audits
1. Organize Financial and Tax Records
- Ensure all tax returns filed are complete and accurate.
- Gather supporting documents such as invoices, receipts, bank statements, and contracts.
- Maintain clear records of income, expenses, and deductions claimed.
- Compile accounting records, ledgers, and financial statements.
2. Review Compliance and Tax Payments
- Confirm all provisional and final tax payments are up to date.
- Check VAT, PAYE, UIF, and SDL submissions and payments.
- Prepare explanations for any outstanding balances or late filings.
3. Assign a Point of Contact
- Designate a knowledgeable representative to liaise with SARS officials.
- Ensure this person is familiar with the business operations and financials.
- Train staff on how to interact with SARS auditors professionally.
4. Understand the Scope of the Audit
- Request details on the focus areas or periods under review.
- Prepare documents and explanations related to those specific areas.
- Be ready to clarify discrepancies or unusual transactions.
5. Prepare Your Premises and Systems
- Ensure all relevant documents are accessible and well organized.
- Provide a clean, professional space for SARS officials to work if the audit is on-site.
- Ensure IT and accounting systems are operational for data retrieval.
6. Develop a Response Plan
- Plan how to handle queries or requests for additional documentation.
- Keep records of all communications with SARS during the audit.
- Consider legal or professional advice to manage complex issues.
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7. Common Audit Triggers to Watch For
- Large or unusual transactions not supported by documentation.
- Inconsistent or incomplete tax returns.
- Late or missing tax payments.
- Discrepancies between third-party data and reported income.
8. After the Audit
- Review the auditor’s report carefully.
- Respond promptly to any findings or queries.
- File objections or appeals if you disagree with any assessments.
- Implement any recommended compliance improvements.
Conclusion
Being well-prepared for a SARS site visit or audit can greatly reduce stress and increase the likelihood of a favorable outcome. Following this checklist ensures your records are in order and your responses to SARS are professional and timely.
For professional support in audit readiness and SARS compliance, consult experienced South African tax advisors who can guide you through the entire process.
