JHB 
VAT is one of the most scrutinised areas of tax compliance in South Africa, and SARS has been given stronger powers to enforce it. In recent years, there has been a noticeable rise in estimated VAT assessments — often issued where taxpayers fail to file returns, provide incomplete records, or neglect to respond adequately to SARS information requests.
For business owners, it’s critical to understand how these assessments work, the different types that exist, and the procedures that follow if SARS raises one against you.
Why estimated assessments are increasing
Under Section 95 of the Tax Administration Act, SARS may issue an estimated assessment if it believes a taxpayer has obstructed or delayed the proper assessment process. This could happen when:
- VAT returns are not submitted;
- Information provided is inadequate; or
- Requests for supporting documentation are ignored.
Estimated assessments were originally intended as a last resort, but our experts caution that they are becoming more common, sometimes even when accurate information could have been obtained elsewhere.
The four types of tax assessments
Taxpayers often don’t realise that SARS can issue several different kinds of assessments — each with its own implications:
Original assessment
the first assessment raised by SARS.
Additional assessment
raised when new information emerges or corrections are needed.
Reduced assessment
issued when SARS adjusts a previous assessment downward.
Jeopardy assessment
used in urgent cases to secure tax that SARS believes is at risk.
Any of these assessments can, in certain circumstances, be based on an estimate.
How to respond to an estimated assessment
If you receive an estimated VAT assessment, quick and thorough action is essential:
Request reasons
Ask SARS for the grounds behind the assessment.
Submit accurate records
Provide the missing or corrected information within 40 business days (or request an extension).
Seek a reduction
SARS may adjust or reduce the estimate based on the documentation you supply.
Suspend payment
You may request SARS to suspend payment of the disputed tax until the issue is resolved.
Objection and dispute rights
Unlike an additional assessment, an estimated assessment only becomes subject to objection and appeal once SARS either:
Decides not to revise it after receiving your documents, or
Issues a corresponding additional assessment.
This means timing is everything. Waiting too long to provide information can cause the estimated assessment to stand — leaving your business with limited recourse.
Key takeaway for businesses
VAT estimated assessments should not be taken lightly. They can quickly escalate into binding liabilities if ignored. Businesses should:
- Keep meticulous VAT records;
- Respond fully and timeously to SARS correspondence; and
- Seek professional tax support from your MMS lead if an assessment is raised.
By staying prepared and proactive, you reduce the risk of an estimated assessment being issued — and strengthen your position if SARS challenges your VAT submissions. Reach out to our team if you are concerned about your VAT compliance.