A Verification Does Not Have to Become a Crisis
Receiving a SARS verification notice can immediately create concern for a business owner or finance manager.
What does SARS want? Has something gone wrong? Is this an audit? What documents need to be submitted, and how quickly must the business respond?
The first thing businesses should understand is that a SARS verification and a SARS audit are not the same process.
SARS defines verification as a check of information contained in a declaration or return. The information may be compared with third-party data, financial and accounting records, and other supporting documents to establish whether the return fairly and accurately represents the taxpayer’s position.
Any taxpayer can be selected for verification.
Being selected therefore does not automatically mean SARS believes tax evasion or deliberate non-compliance has occurred.
However, the way a business responds matters.
Missing documents, contradictory records or failure to respond within the required timeframe can complicate what might otherwise have been a manageable tax verification process.
Preparation is therefore one of the most effective ways to reduce unnecessary delays.
What Happens During a SARS Verification?
A verification generally begins after a declaration or return has been submitted.
SARS sends an official notification advising the taxpayer that the return has been selected for verification.
The letter will identify the information required and provide a timeframe for responding.
Businesses should read this correspondence carefully rather than immediately uploading every tax document they possess.
The objective is to provide the relevant information requested by SARS clearly, accurately and within the prescribed timeframe.
Verification vs Audit: Understanding the Difference
These terms are often used interchangeably, but SARS treats them as separate procedures.
SARS Verification
Verification focuses on checking information declared by the taxpayer.
SARS may compare the return with:
- Third-party information
- Financial records
- Accounting information
- Supporting documents
The objective is to determine whether the declaration appears accurate.
SARS Audit
An audit is more extensive.
SARS describes an audit as an examination of financial statements, accounting records and supporting material to determine whether a taxpayer correctly declared their tax position.
A verification can therefore be relatively focused, while an audit may examine a broader range of information.
Why Businesses Are Selected for Verification
SARS can select any taxpayer for verification.
Businesses should therefore avoid assuming that selection proves something is wrong.
A verification may arise because SARS needs supporting information to confirm a particular declaration.
The practical focus should be on answering the request properly rather than speculating about why the business was selected.
Documents Every Business Should Have Ready
The exact SARS supporting documents required will depend on the tax type and the information being verified.
However, businesses should maintain organised records throughout the year.
Potential supporting information may include:
Tax Invoices
Valid invoices are particularly important when supporting VAT positions and business expenses.
Documents should be complete, legible and connected to the transaction being claimed.
Bank Statements
Bank records may help substantiate:
- Income received
- Expenses paid
- Business transactions
- Movement of funds
They should reconcile with accounting records where relevant.
Financial Statements
Annual financial statements provide an important overview of the business’s financial position.
Figures appearing on tax returns should be capable of reconciliation with the underlying accounting information.
Accounting Records
Detailed ledgers may be required to explain individual figures or transactions.
Businesses should maintain clean and accurate records rather than attempting to reconstruct them after receiving a SARS request.
Contracts and Agreements
Contracts can be important where tax treatment depends on the nature of a transaction.
Examples include:
- Loan agreements
- Service contracts
- Rental agreements
- Sale agreements
- Shareholder arrangements
Payroll Documentation
Where employment taxes are relevant, supporting material may include:
- Payroll reports
- Employee tax certificates
- PAYE reconciliations
- Employment information
Read the SARS Letter Carefully
One of the simplest but most important steps is to read the verification letter from beginning to end.
Identify:
- Which tax period is affected
- Which tax type is being reviewed
- What documents have been requested
- The response deadline
- How the documents must be submitted
Do not assume the request is identical to a previous verification.
Every case should be handled according to the specific notice issued.
Organise Documents Before Uploading Them
Submitting a large collection of disorganised documents can make a verification unnecessarily complicated.
Instead:
- Group documents logically.
- Ensure scans are legible.
- Check that the correct periods are included.
- Remove irrelevant duplicates.
- Confirm that calculations reconcile.
The goal is to make the tax position easy to understand and substantiate.
Check the Technical Submission Requirements
SARS currently permits verification documents to be submitted electronically through channels including eFiling, depending on the circumstances.
According to SARS’s verification guidance, supported upload formats include PDF, DOC/DOCX, XLS/XLSX, JPG and GIF. SARS states a maximum size of 5 MB per document and allows up to 20 documents through the verification upload process described in its guidance.
Businesses should always check the current instructions contained in their verification notice before submission.
Don’t Submit Until the Response Is Complete
This is particularly important when using eFiling.
SARS advises taxpayers to upload all requested material and only click submit once they are satisfied the correct documents have been uploaded, because the verification upload link closes after submission.
That makes preparation essential.
A rushed submission may leave out critical supporting information.
What Happens After Documents Are Submitted?
Once SARS receives the requested information, it reviews the material against the relevant declaration or return.
SARS currently states that it will attempt to complete verification within 21 business days after the requested documents have been uploaded, although additional information may be requested during the process.
This is an important distinction.
The timeframe is not necessarily a guarantee that every matter will be finalised within exactly 21 business days.
Complex cases or requests for additional information can extend the process.
Verification and Tax Refunds
A verification can also affect refunds.
Where a refund is due and the return has been selected for verification, SARS states that the refund will only be paid after the verification process has been completed.
For businesses relying on VAT or other refunds for cash flow, this makes accurate documentation particularly important.
Delays in responding can contribute to longer waiting periods.
Common Causes of Verification Delays
Missing Documents
Failing to provide everything requested may result in additional correspondence.
Illegible Information
Poor-quality scans or incomplete documents may not properly substantiate a transaction.
Figures That Do Not Reconcile
If supporting records contradict the submitted return, further explanation may be necessary.
Responding Too Late
Missing the stated deadline can have serious consequences.
Providing Irrelevant Information
More documentation is not always better.
The objective should be to provide relevant, organised evidence that addresses SARS’s request.
What Happens If You Don’t Respond?
Ignoring a SARS verification is not a solution.
SARS states that where a taxpayer does not submit the required documentation or a Request for Correction, a second letter may be issued. If the taxpayer still does not respond by the deadline, SARS may issue a revised assessment based on the information available to it.
That revised assessment may not reflect information that could have supported the taxpayer’s original position.
Prompt action is therefore essential.
What If You Discover a Mistake During Verification?
Sometimes preparing supporting documents reveals that the original return was incorrect.
The correct response depends on the circumstances and procedural stage.
SARS’s verification guidance specifically provides for a Request for Correction (RFC) where a taxpayer wishes to change the original declaration, subject to the applicable process.
Businesses should avoid attempting informal corrections without understanding the correct SARS procedure.
Professional advice can be valuable when the error is significant or affects multiple tax periods.
What If SARS Changes the Assessment?
If SARS concludes during verification that the original declaration was incorrect, it may issue a revised assessment.
Depending on the circumstances, this could result in:
- Additional tax
- Interest
- Understatement penalties
- A reduced refund
SARS notes that understatement penalties can, in serious circumstances, reach up to 200% of the shortfall, depending on the behaviour involved.
This is why accurate initial submissions and properly supported responses matter.
What If You Disagree with the Verification Outcome?
A revised assessment is not necessarily the end of the matter.
Taxpayers have dispute rights where they disagree with SARS’s findings.
The appropriate process will depend on the assessment and circumstances.
Businesses should review the outcome promptly because tax disputes are governed by procedural requirements and deadlines.
Preparing Before SARS Ever Contacts You
The strongest verification strategy starts long before the verification letter arrives.
Businesses should maintain a verification-ready tax file throughout the year.
This means:
- Reconciling tax accounts regularly
- Keeping valid invoices
- Maintaining accounting records
- Retaining contracts
- Keeping payroll documentation organised
- Reviewing unusual transactions
- Ensuring returns agree with financial information
If SARS requests supporting documents, the business can then respond from an organised file rather than reconstructing months or years of records.
Conduct Internal Compliance Reviews
Periodic internal reviews can identify:
- Missing invoices
- VAT discrepancies
- Payroll differences
- Incorrect classifications
- Unsupported deductions
- Accounting errors
Correcting these issues early reduces pressure later.
Keep Tax and Accounting Teams Aligned
One common source of verification difficulty is a disconnect between accounting and tax records.
Your accountant may have one figure.
Payroll may have another.
The return may contain something different.
Regular reconciliation between departments helps ensure everyone is working from consistent information.
How CTV Can Assist with SARS Verification
A verification can be straightforward when records are accurate and well organised, but complex cases can require professional assistance.
CTV can assist businesses with:
- Reviewing SARS verification notices
- Identifying required supporting documentation
- Reconciling tax information
- Preparing verification responses
- Identifying discrepancies before submission
- Communicating with SARS
- Reviewing revised assessments
- Advising on appropriate corrective or dispute procedures
The objective is to provide SARS with a clear, accurate and properly supported response while protecting the taxpayer’s position.
Don’t Wait for the Deadline
One of the biggest mistakes businesses make is treating the response date as the date to start preparing.
Supporting documents can take time to retrieve.
Accounting discrepancies may need investigation.
Third-party records may need correction.
The earlier the verification is reviewed, the more time the business has to prepare a complete response.
Conclusion
Receiving a SARS verification request does not automatically mean your business has done something wrong. It means SARS wants to confirm information contained in a return or declaration.
The difference between a manageable verification and a prolonged tax problem often comes down to preparation.
Accurate accounting records, organised supporting documents, regular reconciliations and a prompt response make it significantly easier to demonstrate the accuracy of your tax position.
Businesses should also remember that a verification is different from an audit and that ignoring a verification request can result in SARS issuing a revised assessment based on the information available.
If your business has received a SARS verification request, contact CTV as soon as possible. Our team can help you review the notice, prepare the required supporting information and manage the response correctly from the outset.
