Tax and SARS knowledge base
Should a business use the SARS Voluntary Disclosure Programme?
When should a company consider a SARS VDP application?
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Direct answer
A company should consider the SARS Voluntary Disclosure Programme, or VDP, when it has identified a historic tax default and needs specialist advice on regularising it before acting. SARS says the programme aims to encourage taxpayers to regularise their tax affairs and avoid understatement and administrative penalties, where the statutory requirements are met. It covers taxes administered by SARS, but excludes duties and levies charged under the Customs and Excise Act.
VDP is not a generic clean-up method, a way to withdraw a return, or a substitute for objecting to an assessment. It is a formal process with legal requirements. A company should preserve the facts and obtain advice before contacting SARS in a way that could affect the VDP analysis.
What this means in practice
Typical issues include omitted income, incorrect deductions, unregistered tax products, payroll errors, VAT errors, offshore disclosures or historic return omissions. The first task is to establish the facts. Collect the returns, accounting records, invoices, bank information, contracts, PAYE and VAT workpapers, correspondence and a dated chronology.
Do not rush to submit amended figures or an explanatory letter without advice. The timing, prior SARS action, completeness of the disclosure and nature of the error can matter. A VDP application should be accurate and complete, not an estimate designed to open a discussion.
Step-by-step
- Preserve the record. Secure historic ledgers, tax returns, source documents and SARS letters. Stop deletion or alteration of records and create a read-only working copy.
- Define the possible default. Set out what was filed or omitted, which tax periods are affected, how the issue arose and the estimated tax, interest and penalties. Separate facts from assumptions.
- Check whether VDP is the right route. SARS describes VDP as a programme for tax defaults. Obtain independent tax advice on the statutory requirements, whether SARS has already acted, and whether objection, correction, remission or another route is more appropriate.
- Prepare a complete disclosure file. Reconcile calculations to books and records. Explain the origin of the error, relevant tax types, periods, amounts and supporting documents. Do not omit an inconvenient related issue.
- Submit and manage follow-up carefully. Use the SARS process instructed for VDP and retain proof. Respond consistently to follow-up requests. Keep a log of every submission, call and agreement.
- Implement the outcome. If SARS concludes a VDP agreement, reconcile every return and payment to it. Continue normal filing duties and retain the full record.
Important limits and exceptions
This guide does not establish VDP eligibility, acceptance, relief, tax payable or penalty outcome. Customs and Excise duties and levies are excluded from the SARS Tax VDP described by SARS. Fraud, incomplete disclosure, active SARS action and multi-tax issues require specialist review.
When to get tailored advice
Get independent tax and legal advice immediately after identifying a material historic default. TaxProof can help organise source records and a chronology. We cannot determine eligibility or submit a VDP conclusion without the complete facts.