Tax and SARS knowledge base
Should I use SARS VDP to correct past tax defaults?
Should I use the SARS Voluntary Disclosure Programme to correct past defaults?
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Direct answer
Consider the VDP when there is a genuine prior tax default and the disclosure can be voluntary, full and complete. A valid application can provide defined relief from understatement penalties, qualifying administrative penalties and criminal prosecution for the disclosed tax offence.
VDP does not erase the underlying tax or interest. It also excludes relief for late-submission penalties, and it is not a compromise of the tax debt.
What this means in practice
Do not submit corrected returns casually before deciding strategy. First map every affected tax type, period, amount and behaviour. The disclosure must cover material facts from when the default began. SARS may reject an incomplete or non-voluntary application.
Applications are made through eFiling. An anonymous non-binding opinion may be available where eligibility is uncertain, but it is not itself an application for relief.
Step-by-step
- Preserve records and identify all affected periods.
- Calculate tax, interest and likely penalties.
- Test every statutory validity requirement.
- Decide whether to seek a non-binding opinion.
- Submit a full VDP application through eFiling.
- Respond completely to information requests.
- Review, sign and comply with the VDP agreement and payment terms.
Documents and records to keep
- Default chronology and tax calculations.
- Source documents and reconstructed records.
- VDP application and correspondence.
- Signed agreement and assessments.
- Payment-arrangement and payment proof.
Important limits and exceptions
Relief is limited to defaults covered by the agreement. Material non-disclosure can cause relief to be withdrawn. Customs and excise duties are outside the tax VDP described here.
When to get tailored advice
Obtain specialist advice before applying where fraud, several entities, payroll taxes, offshore income or large amounts are involved.