This tale is one small example of a massive issue that no one yet seems willing to expose. When I shared it at an accountants' workshop, similar “war” stories came back at me from all sides. So here it is.
On 28 February 2010 my corporation paid a dividend of R240 000 out of cash accumulated over several years to reduce reinvestment risk and not leave cash idle. I paid the STC of R24 000 on the dividend within the prescribed time, properly filled in the IT 56 and received an IT 45 acknowledging receipt of payment.
To enable my corporation to collect outstanding debts from public sector organisations such as the Rand Water Board, the CSIR and the Development Bank of Southern Africa, I had to obtain a tax clearance certificate, which I duly applied for on 12 July 2010. Our application was turned down. On telephoning the call centre I was told that my corporation had paid the STC one year late and was subject to a fine plus accrued interest and that my corporation had not completed an IRP 5 reconciliation for 2001 – which was ten years ago! Those were the days when I would personally hand in these reconciliations.
Not having the computer skills to download the programme required for the reconciliation, I paid an accountant R5 000 to resolve this matter and assembled all the evidence proving that I had paid the STC in time. I then paid a visit to the Randburg branch of SARS.
After two hours of playing “musical chairs” in trying to get attended to, I at last met with a surly consultant who declared that SARS does not make mistakes such as this and that I needed to put the whole situation in writing on a company letterhead. He refused to look at my financial statements showing that I had paid the dividend in 2010. He gave me permission to hand the letter directly to him on my return to avoid a “musical chairs” replay.
Two hours later I returned to deliver the letter only to be confronted by two security guards that would not allow me to deliver it to the consultant - who I could see idly sitting at his desk. Having played scrumhalf in school rugby, I ducked between the two “heavies”, handed the letter to the consultant and was berated by one of the fumbling security guards for having by-passed the “musical chairs” procedure. A classic rugby sidestep enabled a quick exit past the guard and back to my car.
Two weeks later I commenced a routine of phoning the call centre once a week. Each week I was told that the matter was in the system and had been “escalated” to a supervisor. I have since accumulated enough reference numbers to publish a book of random tables… Eventually, in frustration, I telephoned a SARS contact based at its Alberton office who had previously helped me with queries, to be severely told off for “trying to by-pass the system”.
I then called a past student of mine who now works at SARS. He acknowledged that I had a good case, advised me to download an ADR 1 form from the SARS website, and to follow the procedure it advises. After an hour of waiting for a call centre consultant to help access this form, I made the tactical decision that this conflict was wasting too much valuable time, so paid the disputed fine and reapplied for a tax clearance certificate. Again it was declined.
On telephoning the call centre I was informed that my corporation now owed R5 704,46, being an amount of R2 485 I had overpaid in error to SARS in 2001 (note: OVERPAID) plus penalties and interest thereon. And I was also informed that my corporation's 2000 PAYE reconciliation was outstanding, which was a new and unwelcome surprise. I wrote a letter giving evidence that in fact SARS owed my corporation R2 485 plus interest and requested my granddaughter to deliver it to the SARS Randburg offices. She was informed that she could not hand in this letter without a sworn affidavit from my corporation.
I have at last realised that I may never win this battle against what I believe to be blatant malpractice. My deep experience of the International Financial Reporting Standards and many years of experience with government organisations make me an invaluable resource to the public sector, but I effectively am barred from contributing my skills. For the sake of my sanity and peace of mind I have written off the amounts owed to me by various public sector agencies as being uncollectible.
This incident, and similar ones described by other accountants, is illuminating an issue within SARS that may be preventing the public sector from accessing skills that it clearly and urgently needs. This may well prove to be a massive but fixable problem which no one with the necessary authority appears to be tackling it. asa
Author: Charles Hattingh CA(SA), Chartered Financial Analyst, is the Managing Member of P C Finance Research cc.