A SARS verification letter says your return has been selected for verification. A verification is a request for the documents behind a number you declared. It is a different process from an audit and it does not mean SARS has found anything wrong. If you can produce the documents within the deadline, the verification closes. This post explains what the letter means and what to do.

The difference between a verification and an audit

In a verification, SARS checks that what you declared matches your supporting documents. You upload the paperwork, SARS checks it, and the matter closes. An audit is a deeper, more formal examination of your affairs and can run for months. The letter states which one it is, exactly what SARS wants, and the deadline. If you ignore a verification, SARS can escalate it to an audit.

Respond to the letter by the deadline. If you don't respond, SARS can raise an estimated assessment against you and add penalties and interest. Unwinding an estimated assessment takes far longer than answering the original verification.

Reasons SARS selects a return for verification

SARS receives third-party information from banks, employers, medical schemes and others, and cross-checks it against your return automatically. A verification can follow when your figures don't match that information or look unusual against SARS's own records. These are some of the reasons a return is selected:

  • A VAT refund claim. SARS checks refunds more closely as standard practice.
  • Figures that don't reconcile to the third-party data SARS already holds on you.
  • Large changes from one year to the next, or deductions that look large compared with your declared income.
  • Round numbers and estimates where SARS expects exact, invoice-backed figures.
  • New registrations and first-time claims.
  • Random selection.

Being selected does not mean you've done anything wrong. SARS wants to see the evidence, and if you have it, the verification closes in your favour.

Documents SARS asks for

Depending on the return, SARS can ask for invoices issued and received, bank statements, contracts, proof of expenses claimed, VAT records, payroll records (IRP5s, EMP501 reconciliations) or logbooks for vehicle claims. In every case you have to prove the number. If you claimed R80,000 of repairs, SARS wants the invoices that add up to R80,000. A summary will not do. For every VAT claim you need a valid tax invoice, because a card slip does not qualify.

5 years
How long you must keep supporting records

The 21-business-day timeline

The letter gives you a period to submit documents, typically around 21 business days, via eFiling. Once you've uploaded everything, SARS reviews it. It either accepts your return as filed and sends a completion letter, or it raises a revised assessment. If the assessment goes against you and you disagree, you can lodge an objection, which is a slower and more formal process. The verification closes fastest when you send complete, reconciled documents in one batch.

Understatement penalties

If a verification or an audit finds that you understated your tax, SARS can add an understatement penalty on top of the tax and interest. The percentage depends on your behaviour. It starts at a lower rate where you didn't take reasonable care and rises towards 200% for deliberate evasion. Complete, accurate records keep you at the bottom of that scale or off it entirely.

How to respond step by step

  1. Read the letter carefully. Note exactly what's requested and the deadline.
  2. Gather the supporting documents, such as invoices, statements and contracts, that back the figures SARS has queried.
  3. Check that the documents reconcile to what you declared. If you find an error, disclose it and correct it.
  4. Upload everything through eFiling in one clearly labelled batch.
  5. Keep copies of what you sent and of all SARS correspondence.
  6. If anything is complex or missing, or the numbers don't reconcile, ask us to help before you respond.

Two businesses with the same VAT verification

Two businesses receive the same VAT verification with 21 business days to respond. The first keeps every invoice in cloud accounting software. The owner exports the invoices, reconciles them to the VAT201 and uploads them in an afternoon, and SARS pays the refund the following week. The second owner has to rebuild a year of receipts from a carrier bag and misses the deadline. SARS raises an estimated assessment that leaves out half the input VAT, and the owner spends two months on an objection to recover it. The difference between the two outcomes came from bookkeeping kept up to date during the year.

What happens after you respond

Once your documents are in, one of two things follows. If SARS accepts them, you receive a completion letter confirming the verification is finalised, and SARS releases any refund involved. If SARS disagrees with a figure, it issues an additional or revised assessment setting out the change. You then have the right to lodge an objection within the SARS timeframes, and an appeal if the objection fails, provided you have grounds and evidence. An objection takes longer and is more formal than a verification. Sending the right documents the first time lets you close the matter at the verification stage.

Keeping records ready for a verification

A verification takes an afternoon if your records are complete. Keep your books up to date during the year, ideally in cloud software that stores the source document against every transaction, and file every receipt as you go. If you have a letter now, or you want your records ready for the next one, talk to us. We handle SARS correspondence for our clients, and we can deal with this verification for you or set up your records for the next one.