Insurance against SARS

Insurance protection for companies, trusts, and individuals is now available to mitigate the costs of defending a South African Revenue Services (SARS) tax audit and related disputes.

“The frequency of tax audits has increased significantly in the last two years, and it is no longer a matter of if, but when, you or your business will be audited by SARS,” explains Ann Cloete, of Aon South Africa.

“In many instances, it is also not a simple case of only auditing your last financial year; the audit can potentially span years. This can be an enormous task in terms of time and accounting skills – having to delve into your records, over many years, with a fine-tooth comb to substantiate your position,” she adds.

Cloete says the reality for the taxpayer is that defending a SARS tax audit or dispute can be incredibly costly, and the taxpayer is liable for all the related costs of accountants, tax specialists, and possibly even legal experts to prepare and defend the audit. “Many taxpayers simply do not have the financial resources for – nor access to – specialist tax teams, and it’s here where the risk of an unfair audit outcome becomes a real risk,” she notes.

Preparing for and defending a SARS tax audit, especially an extensive one, will require specialist skills that go well beyond having a qualified and capable accountant handling your tax and bookkeeping affairs.

Legislation is constantly changing and evolving in this space, which means that you are likely to need the skills and advice of a tax specialist (and certainly a legal professional with solid tax experience) if your matter should head to court. These are not skills that the typical individual or smaller business will necessarily have readily available, and the costs soon stack up, especially if the matter drags on for months.

“Aon has launched a tax risk insurance solution that protects you or your business if you are selected for a SARS tax audit, or if there is a dispute with SARS about an unfair re-assessment in terms of which SARS is demanding additional taxes,” says Cloete, explaining that the solution comes in the form of Aon appointing and paying for a team of tax professionals on your behalf to ensure a fair audit and dispute outcome.

“Your accountant will become a central part of the team and their fees are also paid for as part of the claim,” she continues. “Tax risk insurance is all about having the peace of mind in knowing that you will have some of South Africa’s leading tax experts to represent your case when you need it most – to ensure a fair audit outcome, as well as protect you or your business from the onerous and unexpected costs of dealing with an audit and dispute.”

Why you need it

• SARS is under pressure to meet targets, which is leading to increased audits.
• Having a competent accountant or tax practitioner no longer guarantees protection.
• It is very difficult for your accountant to always be 100% up to speed with new tax legislation. Furthermore, your accountant cannot defend you in a court of law.
• Taxpayers may be at risk as you may not have insight into your rights as a taxpayer.
• The costs to defend against a tax audit may be financially debilitating.

The tax risk insurance solution is ideally suited to:

• Small to medium-sized enterprises (SMMEs)
• Trusts
• Individuals

The cover provided by tax risk insurance will trigger in the event of:

• Income tax audits
• VAT audits
• Employees tax audits
• Capital gains tax audits
• Dispute resolution hearings and appeals to the tax board and the tax court

Benefits include:

• Affordable monthly premiums
• No waiting periods
• Once cover is activated, you are covered no matter how far back SARS assesses
• More than one claim per year
• Risk cover in the event of a SARS tax audit for individuals and companies
• Access to South Africa’s top tax specialists
• Removes uncertainty of an unexpected SARS tax audit and related dispute
• Covers the cost of your accountants’ services for the duration of the claim
• Ensures fair tax treatment and audit outcomes
• Cover for defence costs in line with the terms and conditions of the policy