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income tax

Have You Upheld Your Company Deregistration Duties?

Most entrepreneurs have, at some point in their lives, either established a company for their brilliant (or not-so-brilliant) business ventures or have been appointed as a Tax Representative for an existing business. Regardless of whether you belong to these two groups or merely own a now-dormant company, your income tax compliance responsibilities remain the same – either submit your return or face a Notice of Intention to Issue Summons from SARS!

SARS has shifted its attention towards tax representatives of companies that have neglected to meet their tax return filing obligations. If your company falls into this bracket, you will – if you haven’t already – receive an SMS alerting you of non-compliance with your filing duties. The legal proceedings will commence within ten days of receipt of the message, starting with a Notice of Intention to Issue Summons from SARS.

The CIPC Deregistration Misconceptions

As a taxpayer, a lack of finance and corporate governance expertise could lead you to mistakenly believe that when the CIPC announces automatic deregistration for companies failing to file Annual Returns for five consecutive years, it’s a simple way out from all other compliance requirements. However, that’s not the case.

Even though your company’s status on CIPC may be updated to “AR Deregistration”, a formal application for deregistration is still required to finalise the process. This official request must be accompanied by a Tax Clearance Certificate from SARS, which confirms that you have met your tax obligations and that there are no outstanding tax returns or debt owed to SARS. Once your compliance has been proven and the CIPC is satisfied, they will issue the official Notice of Deregistration.

The Forgotten SARS Deregistration

Once you have received the CIPC Notice of Deregistration, you might presume that you have reached the end of the road and your company’s filing obligations are behind you! But there’s more to it. Contrary to the widespread misunderstanding that SARS company deregistration automatically follows once the CIPC process is complete, you are now due for your second formal deregistration request.

A formal deregistration application must be submitted individually to SARS for each registered tax type. This application must also be supported with your CIPC Notice of Deregistration. The only exception lies in the deregistration of PAYE and VAT tax types, which can be done as long as the company is compliant.

Disregarded Tax Representative Responsibilities

Depending on your company’s activity level and whether you have been diligent with your SARS filing obligations, you might already be aware that since May 2021, SARS has mandated every company to have an active Tax Representative – an individual who is also a taxpayer residing in South Africa.

The designated representative is responsible for ensuring the timely filing of all company tax returns with SARS and prompt payment of any due taxes. If you, as the tax representative, have received a recent warning of potential criminal charges from SARS, it is clear that these responsibilities were not adequately met. This implies that in your role as a Tax Representative, you could be held personally accountable for any failure to submit company tax returns, or any debt owed by the company to SARS.

Ensure CIPC and SARS Compliance
Navigating the complexities of CIPC company deregistration and maintaining SARS tax compliance are both daunting. The professional expertise of LMS and MMS Group combine to ensure your company is successfully deregistered with both entities.  Both teams are knowledgeable and well-versed in all legislative compliance regulations stipulated by the CIPC and SARS. By entrusting your deregistration process to us, you can benefit from a wealth of experience to ensure your deregistration is handled efficiently and your income tax compliance obligations are met. Reach out for more information about how LMS and MMS Group will work side-by-side for our clients.