Our unique approach to combating understatement penalties has been hugely successful (100% success rate) and has been vented in litigation proceedings (pre-trial) against SARS. Our approach is almost certain to result in a complete waiver or substantial reduction of understatement penalties in almost any case. For our approach to work, however, you need to contact us as soon as possible. Preferably, from the first time SARS proposes such a penalty (typically when SARS issues their audit letter) if not sooner.
If you have a qualifying case we will work on a no success no fee basis, meaning, if we don’t get the penalty either waived or reduced, you don’t have to pay for our services. Our team of Chartered Tax Advisers, lawyers and ex-SARS auditors, lead by Nico Theron, author of a book on how to challenge SARS’ assessments and decisions, can take your case all the way to Tax Court.
Please complete the form below or contact us directly here if you are interested in making use of our services.
Kindly note that client acceptance is at our sole discretion.
We also assist with Tax dispute resolutions and the SARS VDP.
When you start talking about tax Understatement Penalties, having a tax consultant on your side is most important.
A company like Unicus Tax can assist you in avoiding or handling SARS Understatement Penalties in several ways:
Unicus Tax consultants have a deep understanding of tax laws and regulations and can guide you through the complexities of the tax system and help you understand your obligations.
They can help prevent errors on your tax return that could lead to understatement penalties and can ensure that your return is accurate and complete, reducing the risk of an understatement.
If you’re facing an understatement penalty, Unicus Tax can assist with disputing such, to either reduce the penalty or even have the penalty waived , depending on the facts and circumstances of the case.
SARS imposes an understatement penalty on taxpayers who make an understatement, based on the behaviour which resulted in the default
The penalty can range from 10% to 200% of the tax shortfall, depending on the behaviour that triggered the penalty. The penalty is often imposed following an audit.
When you receive an understatement penalty from SARS, you should:
The impacts of SARS understatement penalties on taxpayers are manifold:
Behaviour | Description | Standard | Obstructive or repeat case |
Substantial understatement | This penalty is imposed when there is a substantial understatement of tax. | 10 % | 20% |
Reasonable care not taken in completing a return | This penalty is imposed when the taxpayer does not take reasonable care in completing the tax return | 25% | 50% |
No reasonable grounds for the tax position taken | This penalty is imposed when the taxpayer has no reasonable grounds for the tax position they have adopted. | 50% | 75% |
Impermissible avoidance arrangement | This penalty is imposed when the taxpayer engages in an impermissible avoidance arrangement. | 75% | 100% |
Gross negligence | This penalty is imposed when the taxpayer shows gross negligence in their tax affairs. | 100% | 125% |
Intentional tax evasion | This penalty is imposed when the taxpayer intentionally evades tax. | 150% | 200% |
Here are some tips for avoiding understatement penalties:
Unicus Tax has a unique approach to combating understatement penalties that has been hugely successful in litigation proceedings (pre-trial) against SARS.
However, specific case studies are not publicly available for review due to confidentiality reasons.
We are expert tax specialists with a vast amount of experience. Our experience and tax exclusive policy places us the forefront of tax law. If you have a tax problem/issue, chances are we have dealt it before and know how to handle it to your best advantage.
We do not do auditing, accounting or any type of work other than tax. We are truly specialised and indeed experts in the field of tax. If you need a true tax expert, we are the people to speak to.
One of our main drivers is to be efficient. Our experience places us in a position to provide high quality deliverables and faster turnaround times.
Understatement penalties are fines imposed by SARS when a taxpayer makes a understatement, which includes incorrect statements in returns, omissions from returns etc.
SARS calculates understatement penalties by multiplying something called a shortfall (for example, the difference between the tax reported as payable and the tax actually payable) with a percentage ranging from 10% to 200% which percentage is determined by the level of culpability (i.e. the behaviours) of the taxpayer
Yes, you can dispute SARS understatement penalties by lodging an objection and providing supporting documents.
The different types of SARS understatement penalties are based on six predetermined behaviours, substantial understatement, reasonable care not taken in completing a return, no reasonable grounds for the tax position taken, impermissible avoidance arrangement, gross negligence, and intentional tax evasion.
Actions or omissions that can lead to understatement penalties include failure to submit a return, an omission from a return, an incorrect statement in a return, failure to pay the correct amount of tax, or an impermissible avoidance arrangement.
Taxpayers may be excused from understatement penalties if the understatement results from a bona fide inadvertent error, voluntary disclosure relief, or possession of a qualifying tax opinion.
You should keep all relevant documentation related to your tax returns and any communications with SARS to defend against understatement penalties.
To prevent understatement penalties, you should ensure that your tax returns are accurate and complete and seek professional advice if necessary.
No. Interest will, however, accrue on the outstanding amount.
SARS imposes understatement penalties for each shortfall in relation to each understatement.
Understatement penalties are fines imposed for inaccuracies in tax returns, while interest charges are additional amounts charged for late payment of taxes.
