In the preamble to the latest Tax Administration Bill, the South African Revenue Service (Sars) indicates that it proposes to “remove the requirement of intent from certain criminal offences”.
In what has become Sars’s attempt at a “tough stance” to scare taxpayers into compliance, it has taken a blunt tool to remove a higher burden of proof that an action – or an omission – had criminal intent.
Sars has already decided that any action or omission was “wilfully done”, and is therefore criminal. So why should it waste time in trying to determine this?
It seems that in Sars’s book, taxpayers cannot make an honest error (naturally this doesn’t apply to Sars’s own staff).
Bowmans partner Patricia Williams explains: “Sars wants to remove the requirement that the relevant action must have been done ‘wilfully’. This removes the requirement of criminal intent before the action is considered a crime.”
Burden of evidence
Sars has in the past attempted to “utilise the criminal offence provisions to extract funds from people”. However, to be successful, Sars had to clear the ‘wilful intent’ hurdle. This was obviously placing too high a degree of skilfulness on Sars’s auditors; after all, ‘wilful intent’ requires a heavier burden of evidence.
Says Williams: “Criminal intent already encompasses dolus eventualis – that is, foreseeing the reasonable possibility of an outcome and reconciling yourself to that. In the circumstances, gross negligence would already arguably meet the standard of something ‘wilfully’ done. What Sars is seeking to do is to criminalise mistakes.”
Many frustrated taxpayers and tax practitioners complain that Sars treats them like criminals. Well, here is the proof.
Sars intends excising ‘wilful intent’ from:
- Paragraph 30 (employees’ tax offences) of the Fourth Schedule to the Income Tax Act (TAA);
- Section 58 (offences in regard to compliance) of the Value-Added Tax Act; and
- Section 234 of the Tax Administration Act.
The amendment to Section 234 of the TAA now changes an error that can be made by anyone into a criminal act, such as: the failure to notify Sars of a postal address, a physical address, banking particulars used for transactions with Sars, an electronic address used for communication with Sars, or such other details as the commissioner may require by public notice.
It is also apparent that Sars expects all taxpayers to read their public notices, even those without access to the internet or newspapers.
Further, Section 234 provides that Sars may register and allocate a taxpayer reference number to a person who is not registered. Woe betide the person who doesn’t know this, as not using this number in any communication with Sars will turn you into a criminal.
In the Draft Memorandum on the objects of the Tax Administration Laws Amendment Bill, Sars reasons that using the term “wilfully” in respect of a statutory crime is not correct, and that it is not possible to “wilfully” neglect something, and that failing to do something required by the Act could be “problematic”.
Williams is of the view that: “This is patently wrong. One can purposefully fail to submit one’s tax return, or purposefully fail to pay one’s taxes. This looks like Sars is misstating the position, in order to make the proposed [unfair] amendment seem more reasonable.”
The National Prosecuting Authority (NPA) is of the view “that the current wording relating to criminal offences substantially undermines the ability of Sars to ensure compliance based on the objective standard expected of the reasonable person”.
“Consequently,” it says, “this may hamper the criminal prosecution of non-compliant taxpayers by the NPA in seeking to prove the elements of the crime.”
Williams is surprised: “Since when is it justifiable to remove certain elements of a crime in order to make it easier to prosecute?”
Is it possible that the NPA, which cannot point to a successful record in making powerful criminals account for their crimes, realises that it is not competent to pull off an ‘Al Capone’ tax arrest without removing ‘wilful intent’?
As for Sars, do its problems stem from the term ‘wilful intent’ scuppering its attempts at prosecuting the big boys – or from its lack of skills, inefficiency, and having been hollowed out by state capture?