When the economy is in a downturn, tax collections come under pressure and SARS audits increase. The likelihood of being selected for an audit increases significant for all VAT vendors especially where a refund is due. Coupled with this, there is an expectation that your response to a SARS audit be completed within a few days, not weeks, and that all information submitted be accurate. Taxpayer delays and inaccurate data can lead to penalties, interest, further detailed onerous requests and more senior personnel at SARS handling your audit.
In light of this trend, it is becoming essential that organisations can vouch for the accuracy of the transactions that contribute towards their VAT return, such as accounts payable and accounts receivable, and ensure that the team members involved with processing those transactions get it right first time, every time.
It goes without saying that nobody wants to be audited. Audits invariably lead to added business pressure, further demands on already stretched resources and creation of potential ongoing relationship issues with SARS. Therefore, it isn’t surprising that many tax or financial managers as well as chief financial officers are willing to look at technology options that can monitor internal processes, check for VAT compliance and test transactional and master data in the hope that it would ultimately reduce the frequency or impact of a SARS audit.
But SARS already have a head start and their analytics capabilities will become ever more sophisticated as time passes. The reality is that without procuring a technology solution soon, organisations could very well find that the complexity and time involved when submitting their VAT201 increases.
Adopting a technology-driven approach to VAT, does not need to be complicated or expensive. With many finance and tax departments already stretching their resources to meet their business support, reporting obligations, few have time to put towards identifying ways to ease the burden. Data analytics can be deployed on a full-time basis and become a valued addition to the team. Reducing complexity and disruption whilst increasing longer-term savings and improved compliance and monitoring.