How to Prepare for a SARS Verification

What is a SARS Verification?

A verification is a process by which the South African Revenue Service (SARS) checks the accuracy of information declared in a tax return. It is less intensive than a full audit but should be taken seriously — an inadequate or delayed response can escalate the matter into a full audit, result in additional assessments, or attract penalties and interest.

SARS has the power to verify returns under section 42 of the Tax Administration Act 28 of 2011 (TAA). A verification can apply to any tax type, including income tax, VAT, PAYE, and provisional tax.

What Triggers a Verification?

SARS uses a risk-based selection model. Common triggers include:

• Significant deductions or refund claims: Large input VAT refund claims or substantial business expense deductions relative to income are common triggers.
• Inconsistencies between returns: Discrepancies between your income tax return and your VAT returns, or between your PAYE submissions and your employees' individual returns.
• Third-party data mismatches: SARS receives data from banks, employers, medical schemes, retirement fund administrators, and other third parties. If this data does not match your return, a verification is likely.
• First-time filers or newly registered entities: New taxpayers are often verified as a matter of course.
• Random selection: SARS also conducts random verifications as part of its compliance programme.

What Does SARS Ask For?

A verification request will specify the tax period and the items being verified. Commonly requested documents include:

• Bank statements for the relevant period.
• Invoices and receipts supporting deductions or input VAT claims.
• Payroll records and IRP5 certificates (for PAYE verifications).
• Lease agreements or bond statements (for rental income or home office deductions).
• Logbooks (for travel allowance claims).
• Financial statements and management accounts.
• Contracts with major clients or suppliers.

Key Deadlines and Consequences

Under the TAA, SARS must notify you of a verification and give you a reasonable opportunity to respond. The standard response period is 21 business days, though SARS may grant an extension on request. Missing the deadline without requesting an extension can result in:

• SARS issuing an estimated assessment based on available information — which is almost always unfavourable to the taxpayer.
• Penalties for non-compliance under section 210 of the TAA.
• Escalation to a full audit.

How to Respond Effectively

1. Read the request carefully. SARS will specify exactly what it is verifying. Do not provide more information than requested — over-disclosure can open new lines of inquiry.
2. Gather and organise your documents. Ensure all documents are legible, complete, and clearly labelled to correspond with the items in the verification request.
3. Reconcile your figures. Before submitting, reconcile the figures in your documents against the amounts declared in your return. Any discrepancy should be explained in a covering letter.
4. Submit via eFiling or the SARS Online Query System (SOQS). Keep proof of submission — a reference number and confirmation email.
5. Respond to follow-up queries promptly. If SARS requests additional information after your initial response, treat it with the same urgency as the original request.

What if SARS Issues an Additional Assessment?

If SARS is not satisfied with your response, it may issue an additional assessment. You have the right to object to the assessment within 30 business days of the date of the assessment notice. The objection must be submitted via eFiling and must set out the grounds of objection clearly. If the objection is disallowed, you may appeal to the Tax Court.

How ClauseWise Can Help

ClauseWise assists individuals and businesses with SARS correspondence, verification responses, and tax compliance at fixed prices. We help you gather the right documents, prepare a clear and complete response, and communicate effectively with SARS. Submit an intake form to get started.

ClauseWise provides independent commercial legal support, contract review, dispute resolution support, business risk advisory and document review services to individuals and businesses across South Africa. Where a matter requires formal legal representation, ClauseWise may facilitate an appropriate referral to an independent suitably qualified attorney or advocate through its established panel network.