SARS’ ROLE IN THE CRIMINAL JUSTICE SYSTEM
SARS is mandated through legislation to conduct a criminal investigation if it suspects tax fraud. Once it has been finalised, they register a formal complaint with the South African Police Services.
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This initiates the criminal justice process. A case docket is then forwarded to the National Prosecuting Authority (NPA), where their Special Tax Unit prosecutors decide whether to commence prosecution and issue the taxpayer with a summons to appear in court.
At this stage it can be assumed that there is already a tax implication comprising of penalties and interests due to SARS. However, once the summons arrives, there is a greater future concern that takes shape in the form of legal costs. Criminal fees for every appearance in court can quickly escalate to an astronomical amount.
The costs of going to court
For example, taxpayers need to appoint an attorney to represent them in court as they can expect postponements that could cost up to R100 000 before their matter is enrolled for trial. Once enrolled in court, the taxpayer can expect another hefty bill that could range between R100 000 to R200 000.
Unlike civil court or a tribunal, criminal court is very unpredictable. Anything can happen. While the likelihood is that the matter will be postponed, there is a rare chance that it might be heard on the day. If you had taken the gamble to go without an attorney, then you will have to face the music alone when your matter is called.
Expatriates working abroad
If you are unable to attend the court appearances in person, you will be held in contempt of court and a special warrant of arrest will be issued against you. This means, that if, or when, you do return to South Africa, whether for a funeral, a wedding, or for work, any enforcement officer countrywide may arrest you on sight.
If you are prepared to wait out the legal proceedings, you are in for a long wait. A criminal case can take a couple of years to be resolved. This could have a catastrophic effect on your ability to work as an expatriate, because you will need to be present every time the matter goes to the next step.
The solutions available to taxpayers
As soon as SARS sends out a notice that you are being investigated, you are no longer able to apply for relief through the Voluntary Disclosure Programme (VDP) without incurring serious costs and penalties. That does not make the situation unsalvageable, but it is still a step to be avoided.
The only solution, given the severity of the matter and the rapid escalation of financial costs, is to keep the peace with SARS before they send out a summons, or at least engage in a mediation process to curb the expenses and to avoid a lengthy court process. A specialist tax attorney can assist you through the various pitfalls that might accompany your dealings with SARS.
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