What to Expect if SARS Selects Your Business for an Audit

A SARS audit is an examination of your tax returns, financial records, and supporting documentation to verify that your tax submissions are accurate and complete. Being selected for an audit does not mean SARS suspects you of fraud — many audits are routine, risk-based, or random. Understanding the process before it happens is the best way to navigate it without it becoming a bigger problem than it needs to be.

Types of SARS audits

• Desk audit: SARS requests specific information or supporting documents via eFiling. No physical visit. This is the most common type.
• Field audit: A SARS official visits your business premises to review records. Less common and usually reserved for higher-risk cases.
• Transfer pricing audit: Applies to companies with related-party transactions across borders. Specialised and complex.
• Special investigation: Applied to suspected tax fraud or evasion. Involves Criminal Investigation within SARS and potentially SAPS.

What triggers a SARS audit

SARS uses a risk engine to identify returns for audit. Common triggers include:

• Large or unusual deductions relative to your income — especially home office claims, vehicle expenses, or travel allowances that are disproportionate to reported revenue
• Input VAT claims significantly higher than output VAT, resulting in frequent refund requests
• Significant inconsistencies between your ITR14 and your financial statements
• Income declared to SARS that does not match third-party data such as bank transaction reports or IRP5s filed by employers or clients
• Random selection — a percentage of returns are audited regardless of risk profile
• Industry-wide audits where SARS targets specific sectors it believes have systemic non-compliance

What to do when you receive an audit notification

SARS will notify you via eFiling with an IT3 or a letter specifying what period and tax type is being audited and what documents they need. Do not ignore it. SARS sets a response deadline, and if you miss it they can proceed with an estimated assessment — meaning they estimate what you owe and issue an assessment you are then required to dispute if you disagree.

Respond promptly. Gather all supporting documentation for the period under review. This includes invoices, bank statements, supplier contracts, payroll records, and anything else that substantiates the deductions and income you declared. If you used an accountant for the return, involve them immediately — they can respond on your behalf and will understand what SARS is actually asking for.

Your rights during a SARS audit

The Tax Administration Act gives you specific rights as a taxpayer. You have the right to be informed of what is being audited and why. You have the right to legal representation. You have the right to a reasonable timeframe to gather documentation. You also have the right to dispute SARS's findings if you disagree with the outcome.

What happens after the audit

Once SARS reviews your documentation they issue a Notification of Audit Outcome. If they agree with your return, the audit closes with no further action. If they find discrepancies, they issue a Revised Assessment showing what they believe you owe, including any penalties and interest.

If you disagree with the Revised Assessment, you have 30 business days to file an objection using the NOO (Notice of Objection) process on eFiling. If the objection is rejected, the next step is an appeal to the Tax Board or Tax Court depending on the amount at issue. At each stage you can represent yourself, use your accountant, or instruct a tax attorney.

The most important thing to know: SARS audits are manageable with accurate records and prompt response. The situations that escalate into serious problems are almost always ones where the taxpayer ignored the audit notification or could not produce documentation for deductions they claimed.