THE South African Revenue Service (Sars) is in the process of reviewing the steps companies have to follow when they run into difficulties to comply with a new reconciliation process introduced a year ago.

Sars spokesman Adrian Lackay said they had also agreed to extend the period of submissions of supplementary declarations when there were inconsistencies between VAT, company income tax and employee tax declarations.

Sars reacted to concerns raised by the South African Institute of Professional Accountants (Saipa) that many companies, especially smaller ones, were finding it difficult to comply with the new process.

Mr Lackay said a request for an Income Tax 14 Supplementary Declaration (IT14SD) was only issued in instances where certain risks had been identified.

"On an operational level, Sars has engaged all representative tax practitioner bodies since the new changes for companies were introduced a year ago ... Sars is in regular dialogue with Saipa and other representative tax practitioner bodies.

He said Sars only took steps against companies who failed to complete a reconciliation after a period of "around" 60 days. These steps included the disallowance of certain expenditures.

Ettiene Retief, chairman of the institute’s national tax and stakeholder committee, said the problem was companies found it difficult to align their accounting and tax systems with the information Sars was requesting and to comply with the prescribed time periods, given the fact that they could not get the information in good time.

He also claimed that Sars did not have legislative powers to deny a company certain expenditures. The right to a deduction or allowance in terms of the Income Tax Act is not dependent on the filing of an IT14SD, Mr Retief said.

Mr Lackay said, as in all such matters, the assessments raised in terms of the inconsistencies between the monthly and annual declarations were also subject to objections and appeals.