A verification is SARS checking specific items on your return against supporting documents, and you typically get 21 business days to respond on eFiling. An audit is a full examination of your records. For a small builder the usual triggers are a VAT refund claim, a mismatch between bank deposits and declared income, or deductions out of proportion to turnover. Respond on time with clean paper and most verifications end quietly.
Verification versus audit
- Verification: administrative and narrow. SARS names the items it wants substantiated (a logbook, supplier invoices, the medical certificate) and you upload proof. Often triggered automatically by the system.
- Audit: a formal examination of financial statements, accounting records and source documents for a period, usually triggered by risk flags, third-party data mismatches or a pattern of underreporting.
A verification handled badly, by missing the deadline or sending junk, is how small matters become audits.
What flags a builder
- VAT refund claims, especially large or recurring ones
- Input VAT from suppliers SARS cannot verify
- Bank deposits that do not match declared income
- Deductions disproportionate to turnover
- Cash-heavy trading with no EFT or card trail
- Declared losses three years or more in a row
- Turnover past the VAT threshold with no VAT registration (see VAT for Tradespeople)
- Subbies issuing invalid tax invoices
- Home office claims that do not fit the property or the trade
None of these prove wrongdoing; they buy you a letter. The defence is the paper trail, not the explanation.
The record-keeping rules
Section 29 of the Tax Administration Act requires records to be kept for 5 years from the date you submitted the return, and longer in three cases:
- Return never submitted: keep the records indefinitely until it is
- Under audit or investigation: keep everything until it concludes
- Assessment in dispute: keep everything until the dispute is finally resolved
Keep invoices issued and received, bank statements, payment proofs, contracts, logbooks, asset registers, payslips and EMP201s, and lease agreements, in original or approved electronic form.
Responding to a verification
- Open the letter on eFiling the day it arrives; the clock (typically 21 business days) is already running
- Upload exactly what was asked for: tax invoices, bank statements, the logbook, contracts
- If a document genuinely does not exist, say so in a covering letter rather than going silent
- Never ignore it: non-response lets SARS disallow the deduction and raise an additional assessment
Disputing an assessment
If you disagree with the outcome:
- Notice of Objection (NOO): file on eFiling within 30 business days of the assessment, stating exactly which items you dispute and why
- Appeal: if the objection is disallowed, appeal within 30 business days to the Tax Board (informal and cheap, for amounts up to about R1 million) or the Tax Court above that
- Collection during a dispute can be suspended on request, subject to conditions; apply for the suspension rather than assuming it
Get professional help for any dispute with real money on it. Objections are won on documents and grounds, not indignation.
Common mistakes
- Missing the 21-day window. The cheapest deadline you will ever keep.
- No logbook. The most disallowed item in trade returns (see Travel Claims and Logbooks).
- Cash jobs with no records. Deposits SARS can see plus income it cannot reconcile is the classic audit trigger.
- Sending everything except what was asked for. Answer the letter, item by item.
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