On 11 December 2023, the South African Revenue Service (SARS) announced that the estimated assessment functionality had been implemented for value-added tax (VAT).

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This functionality has been introduced to allow SARS to issue estimated assessments when the vendor does not provide the relevant materials requested by SARS during the verification process.

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With new enhancements, SARS may raise an estimated assessment in terms of section 95 (1) (c) of the Tax Administration Act stating the following:

SARS may make an original, additional, reduced or jeopardy assessment based in whole or part on an estimate, if the taxpayer does not submit a response to a request for relevant material, concerning the taxpayer, after delivery of more than one request for such material,

At the point of submission of VAT returns, the return will either be approved by SARS or selected for verification. 

For the verification process, vendors are given 21 business days to attend to the request for relevant materials.

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If the vendor does not meet the 21 days to submit the relevant materials, SARS will issue another final request to submit the relevant materials within 21 days. 

SARS will raise an estimated assessment based on the non-submission of relevant materials if the vendor does not attend to submitting the relevant materials requested by SARS during the final request.

Below are important details to note:

• Estimated assessments issued to vendors can be viewed on the notice (VAT217)
• If SARS has raised an estimated assessment for a VAT period, the vendor will not be allowed to Request For Correction.
• The vendor can submit the relevant material within 40 business days from the date of the VAT217 notice should the vendor not agree with the estimated assessment.
• As per the above point, the vendor can submit the relevant materials using the SARS Online Query System (SOQS) at the SARS branch via an appointment.
• The vendor is awarded an opportunity to ‘Request For Extension’ if the relevant materials cannot be submitted with 40 business days.
• If the Request For Extension is approved, the vendor has an extension of up to five (5) years plus 40 business days to submit the relevant material.
• The vendor can 'Request For Suspension of Payment' if the estimated assessment results in an amount payable.
• However, the vendor is not allowed to submit a 'Notice of Objection' (NOO) as an estimated assessment is issued in terms of section 95(1)(c).

If SARS raises a revised assessment, following the submission of the relevant materials, the vendor can submit a notice of objection or appeal under the normal dispute resolution process.

We hope the above information is helpful for business owners concerned about your company’s tax affairs. 

Should you require further clarity kindly contact our offices at 031 566 5585 or email the tax department:

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Nontando Zondo or Silindile Pearl Phakathi on info@accensis.co.za