by Graeme Palmer

VDP applications

A taxpayer's chance at a new start

A taxpayer's chance at a new start

In the finance minister’s Budget Speech, it was announced that the new permanent voluntary disclosure programme (VDP), which commenced on 1 October 2012, had already seen 700 applications from taxpayers, which would result in more than R200 million in taxes being collected before the end of March 2013.

A taxpayer can make a VDP application if he/she is not aware of a pending or current audit or investigation into his/her tax affairs – but if an investigation or audit has commenced, the taxpayer can only make the application after first obtaining the approval of a senior SA Revenue Service (SARS) official.

In order for the application to be valid, the disclosure must:

  • be voluntary
  • involve a default such as the taxpayer having failed to submit information to SARS, or submitting inaccurate or incomplete information to SARS, or having adopted a tax position that has resulted in an incorrect assessment being issued;
  • be full and complete in all material respects;
  • involve the potential imposition of an understatement penalty in respect of the default;
  • not result in any refund due by SARS; and
  • be made in the prescribed form and manner.


VDP applications can only be submitted electronically via the SARS eFiling system. Once an application has been made, a written agreement must be entered into with SARS. This agreement must state the material facts of the taxpayer’s default, the amount payable to SARS, and the arrangements and dates for repayment. Only once this agreement has been concluded, will the taxpayer qualify for the VDP relief.  

The relief given to the taxpayer will include SARS not pursuing criminal prosecution for tax offences arising out of the default. Interest and understatement penalties, however, will be payable by the taxpayer. This penalty is likely to be somewhere between 0% and 10%, provided that no audit had commenced at the time of making the VDP application. If there has been no gross negligence or intentional tax evasion by the taxpayer, a penalty will be levied at 0%.

It is essential that when submitting a VDP application, the taxpayer makes a full and complete disclosure, failing which, SARS can still pursue criminal prosecution.

Taxpayers should also keep in mind that the VDP relief is dependent on concluding an agreement with SARS for the repayment of tax. If taxpayers are uncertain about the VDP process, they should first seek the assistance of a tax practitioner.

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Issue 72