Insurance against the risk of SARS tax audits and disputes

The risk of you being selected for audit by the South African Revenue Services (SARS) has increased significantly. Defending a SARS tax audit and related dispute can be stressful, complicated and costly.  Even if you win your case against SARS, you will still be liable to pay the costs of your tax accountants and legal advisors.   One of the smartest ways to protect yourself against this risk is to purchase good insurance cover. RBS now offers new tax risk insurance cover underwritten by Bryte Insurance Company, and administered by specialists Tax Risk Underwriting Managers.  

SARS have been raising the standard when it comes to tax collection. The financial downtrend, combined with a systematic increase in government spending has resulted in a rather large tax collections shortfall, and SARS is driving hard to collect additional revenue from an ever-shrinking tax base.  Linked to this trend is the fact that SARS have been given far-reaching legislative powers through the Tax Administrations Act which has serious consequences for taxpayers. Unfortunately it’s not only the few tax dodgers who are being targeted by SARS, but also the thousands of law abiding taxpayers who diligently pay their taxes and who want no trouble from the taxman.

South Africa’s tax revenue collections has increased by a compound annual growth rate of 6.5% over the last 5 years, against the backdrop of a largely flattish GDP growth rate.  Personal tax, VAT and company income tax remain the largest sources of tax revenue at 81.2% of total tax revenue collections.  SARS is collecting more taxes from less taxpayers in a depressed economy, which spells trouble for taxpayers – specifically for high net-worth individuals and SMEs.

What are the risks?

The risk of you being selected for audit by SARS has clearly increased significantly, and we recommend that you take adequate precautions. Even if you believe, like most people, that your taxes are up to date and accurate, SARS can still select you for audit. It is with this in mind that a tax risk insurance product has been created to protect you, the taxpayer, against the risks associated with SARS tax audits and related disputes.  If you, your business or your trust is ever selected for audit, or if there is a dispute regarding an unfair tax-reassessment in terms of which SARS is demanding additional taxes from you, then tax risk insurance will appoint and pay for a team of top tax professionals to deal with the matter on your behalf.  This team may include tax accountants, tax attorneys or any other tax specialists as may be required to ensure a fair and favourable tax audit and dispute outcome – giving you the peace of mind of having some of South Africa’s best tax experts on your side when you need it most.

Don’t delay.  We recommend that you get covered before you get that unexpected call from the taxman.  For more information, watch this short 3 minute YouTube explainer video  Speak to your RBS broker for more information.