What is the possibility that SARS will seize your records?

Business owners often live in fear that SARS will just arrive at their business and seize their records. However, there is a process that needs to be followed before SARS is able to search your business premises.

Under the new Tax Administration Act (TAA), SARS may conduct an unannounced, but limited, inspection at your business premises to verify that you comply with the formal tax obligations under the law.  These obligations include:

• Registration for all of the taxes you should be registered for
• Keeping the necessary financial records
• Providing information regarding previous, current or future taxable events.

In order for SARS to perform a search and seize information, they need to have a warrant. To obtain this, a senior SARS official needs to present the application for a warrant to a judge or magistrate. The application must be supported by information provided under oath by the SARS official as to the facts the application is based on. The judge then needs to be satisfied that a person has either failed to comply with the provisions of the TAA or committed an offence under the Tax Act. The judge must also be satisfied that the information expected to prove the allegations will be found at the business premises.

If the judge does issue the warrant, it needs to state the following:

• the alleged failure to comply with TAA or the tax offence
• the person alleged to have committed the offence
• the premises to be searched
• confirmation that the relevant material is likely to be found at the premises.

It’s also important to note that, even with a warrant, SARS may not enter a residence or domestic premises, except that portion used for business, without the consent of the occupant.

Only in special circumstances can SARS search a premises without a warrant. The first instance is when the owner, or the person in control of the premises, gives permission. All owners and employees need to be aware of this.  Even if you believe that there’s no risk in allowing the search, you should never agree to a search without a warrant. That’s because any discrepancy that SARS may find can be acted on, whereas with a warrant the search is limited to the specific information contained in the warrant.

The second instance is when no consent is given but a senior SARS official is satisfied, on reasonable grounds, that there is an imminent threat of removal or destruction of the information likely to be found. The official also needs to be satisfied that, had SARS applied for a warrant, it would have been granted and the risk is too great to wait for a warrant.

When a search without a warrant is carried out, a SARS official must inform the owner or person in control what the alleged failure to comply or offence is.  They also need to communicate on what legislative basis the search and seizure is being carried out – it must fall under the special powers granted to SARS by the TAA.

In summary, it’s clear that SARS need a warrant to search your business premises. Only under very specific circumstances can they search premises without a warrant. It is up to you, as a tax payer, to know your rights under the TAA in order to keep SARS accountable at all times.