If you owe SARS more money than you can afford to pay then you are a candidate for a tax compromise.
In a nutshell SARS is willing to “park” some (not all) of your current debt in order to ensure that the business continues. The rationale being that this ensures that SARS will receive future income from the business. By “parking” the debt SARS does not write it off but in essence will not demand payment thereof as long as you stick to the compromise arrangement’s terms and conditions. SARS basically treats your debt as no longer due and payable.
The important point to note is that you need to keep to the agreement in order for the “parking” to continue. This entails keeping up to date with all future returns and payments. Should you fall behind again with any statutory returns SARS can “unpark” the debt and take action against you to recover it.
There are only 2 instances where SARS will consider a tax compromise. Firstly where the outcome will result in SARS securing the highest net return on recovery of the tax debt and secondly where the compromise is consistent with good management of the tax system and is administratively efficient.
Companies, close corporations, trusts, partnerships, co-operatives, non-profit organisations and individuals qualify to apply for a tax compromise. It is for taxpayers who legitimately cannot pay their tax debt in the near future (within 12 months).
Should you require further information with regard to the procedure to be followed please contact our office in this regard.