R400000 Tax Fraud – Director and accomplices appear in court.

The director of Real Thought Credit CC Mr Maponye Class Thokwane (55) appeared at Nelspruit Magistrate Court on charges of fraud on 22 September.

Thokwane allegedly colluded with Vusi Antony Mdlui (39) Sibongile Pretty Shabangu (29), Wendy Mkhatshwa (46) and Solomon Mdaka (43) to submit fraudulent tax returns and prejudiced South African Revenue Services of R417 377.23 in March 2018.

He recruited the individuals to submit fraudulent tax returns to him which he submitted to SARS and the money was deposited into his business account and shared the money amongst them. The suspects were granted R3 000 bail each and the case was postponed to 08 December 2020 pending further investigations.

REPORT A SUSPICIOUS ACTIVITY ​

SARS are keen that you consider reporting any suspicious activity which may have relevance to tax to SARS. SARS wants to be sure that everyone is paying their fair share of tax here in South Africa 

What would we consider a suspicious activity?

How SARS can be defrauded, misinformed, misled, deceived, contrived, with the intention to evade tax or obtain an undue refund are too numerous to mention, and it is not possible to offer even the briefest of discussions on every possible such action that may be directed against SARS. Many of these types of conduct are no more but variations of the theme.

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The examples offered is an attempt to better understand the application of our legislation and criminal law in dealing with instances of tax evasion and obtaining an undue refund: 

Examples of suspicious activities include: 

Where a person is legally obliged to register for tax but intentionally fails to do so. Many frauds involve the making of false representations in the trader’s books of account. In many instances, the offender will go to great lengths to ensure the entries in his books of account corresponds with his / her false representations to SARS. 

The making of a false statement or the causation or allowing of a false statement to be made on a tax return have long been one of the most common methods employed by taxpayers in evading their tax liabilities and/or obtaining refunds they were not legally entitled to. A declaration in a return not only covers the information as indicated in the return itself but also covers the information reflected in the accompanying documentation.

Making such a declaration with knowledge or foresight of the information therein reflected to be incorrect, will not only amount to a false declaration but will also be a misrepresentation of the truth. 

A tax-liability can be misrepresented through the submission of a fraudulent tax return.

Defrauding SARS or a SARS official during the administration of the Tax Administration Act through the submission of a fraudulent tax return may be achieved by inflating or exaggerating the deductions or input taxes a taxpayer is entitled to; and/or under-declaring income or output taxes. 

The submission of ‘nil-returns’ or returns giving out that no trade was carried out, e.g. that a company was dormant whereas it did in fact trade, will however also be fraudulent. The failure to disclose certain facts or circumstances on the basis by which the taxpayer can be assessed at a higher amount.

An example of this will be the failure to disclose in his/her tax return certain investments, employment or business operations, etc. Claiming a tax deduction, when at the time when it was claimed is not, in fact, a legitimate claim will be unlawful. 

Misrepresentations that may be employed in claiming a deduction to which the taxpayer is not legally entitled to are many. Most of these misrepresentations will generally fall within either of the following categories:

• The claiming of false deductions. Typical examples of this will be to claim as business expenses salaries paid out to non-existent employees, or to claim for VAT input tax where the goods and services were in fact not acquired
• The claiming of non-deductible expenses as deductible expenses. A commonly used example is the declaration of private expenses as business expenses
• Double deductions for the same expenses or inputs. 

VAT refund schemes where a fraudster will set up a company or number of companies which they register as vendors for VAT purposes. They then claim back VAT refunds on significant inputs allegedly made just to close down the ‘company’ and then disappear with the VAT.

These companies typically never trade, and the ‘inputs’ claimed are fictitious. These operations may typically involve: the creation of both ‘supplier’ and ‘client’ traders with fictitious directors, employees, and addresses, often in various jurisdictions; the opening of multiple bank accounts in the names of multiple entities; the generation of false commercial documentation and books of account; fraudulent registrations as VAT. 

1. A person or business legible for any type of tax but not paying any form of tax.
2. An individual or business employs people and deducts PAYE from employees but not issuing IRP5 certificates.
3. Imported goods being sold on the open market at a price lower than “landed cost” i.e. less than what it would cost to purchase the goods, transport them and pay VAT and duty on importation.
4. A person or business legible and registered for any type of tax but not submitting returns required by SARS.
5. A person living beyond his apparent financial means – displaying unusually high life-style patterns for a person with similar forms of known income.
6. An importer (including the clearing agent) not declaring, false-declaring or under-declaring goods upon importation.
7. An importer or exporter (including the clearing agent) found to have imported or exported goods determined to be illegal (drugs, fire-arms, explosives, CITE described items, counterfeit goods).
8. A person or business has mixed fuel of any kind.
9. A person found to carry an unusually large amount of currency in any form while travelling into or out of South Africa.
10. An individual or business is trading in goods that are suspected of being of counterfeit origin.
11. Derives income from criminal activity.
12. A person or business who makes any false statement or entry in a return or other document required by SARS
13. A person or business liable to be registered for a tax under a tax Act but is not.
14. Customs warehouse irregularities.
15. An individual or business failing to withhold and pay to SARS an amount of tax as and when required under a tax Act. 

Transport vehicles with foreign registration numbers transporting shipping containers to and from smallholdings, plots, farms and derelict warehouses under suspicious circumstances.

If you want to report a suspicious activity, click here. 

Please note: If you experience any challenges with opening the form e.g. if the form is blank after you’ve clicked ‘Continue’ on the first page, it could mean that your browser doesn’t support the Adobe Flash (PDF) form. Known browsers not supporting Adobe forms are Chrome, Safari (Apple) and Edge.

To see how to successfully view PDFs in these browsers, see SARS compatibility guidelines. The form works successfully in Internet Explorer (version 8+), Mozilla Firefox and Safari for Windows. Kindly also note that if you want to upload supporting documents to your suspicious activity report, you need the latest version of Java installed.