Many business owners assume their company is tax compliant simply because they have registered with SARS or submitted a tax return at some point.
Unfortunately, tax compliance is not a one-time event.
It is an ongoing responsibility.
Every year, we encounter companies that believe they are compliant, only to discover outstanding tax returns, unpaid tax liabilities, inactive tax registrations, or compliance issues that prevent them from obtaining a Tax Compliance Status (TCS) Pin.
The reality is simple:
If you do not regularly verify your company’s tax compliance status, you may be exposing your business to unnecessary risks.
In this article, we explain how to determine whether your company is tax compliant and what to do if you discover a problem.
Why Tax Compliance Matters
Many businesses only check their compliance status when they need to:
- Apply for a tender
- Secure funding
- Open a business account
- Apply for licenses
- Register as a supplier
- Obtain a Tax Compliance Status (TCS) Pin
By then, it may be too late.
Tax compliance affects your company’s ability to operate, grow, and access opportunities.
A non-compliant status can result in delays, lost business opportunities, penalties, and increased scrutiny from SARS.
What Does Tax Compliance Mean?
A tax-compliant company generally:
- Has submitted all required tax returns
- Has paid all taxes due or has an approved arrangement in place
- Has accurate taxpayer information registered with SARS
- Meets all applicable tax obligations
Compliance is not only about paying tax.
A company can be fully paid up but still be non-compliant because of outstanding returns.
Warning Sign #1: Outstanding Tax Returns
One of the most common reasons companies become non-compliant is outstanding tax returns.
These may include:
- Corporate Income Tax Returns
- VAT Returns
- PAYE Returns
- SDL Returns
Many businesses are surprised to discover that SARS still expects returns even when the company is not actively trading.
Ask Yourself:
- Have all tax returns been submitted?
- Are there any historical returns outstanding?
- Have dormant periods been properly reported?
If you are unsure, a compliance review is necessary.
Warning Sign #2: Unpaid Tax Debt
Outstanding tax debt can negatively affect your compliance status.
Even where the debt originated years ago, SARS may still regard the company as non-compliant.
Review:
- Income Tax balances
- VAT balances
- PAYE balances
- Penalties and interest
Many companies discover unexpected tax debt after years of non-compliance.
Warning Sign #3: SARS Correspondence Is Being Ignored
SARS regularly communicates with taxpayers through:
- eFiling
- Letters
- SMS notifications
Ignoring SARS correspondence is one of the quickest ways to create compliance problems.
Many compliance issues start with a letter that nobody opened.
Ask Yourself:
- Is someone monitoring SARS correspondence?
- Are all notices being addressed promptly?
Warning Sign #4: You Cannot Obtain a Tax Compliance Status Pin
A valid Tax Compliance Status (TCS) Pin is often the easiest indicator of whether your company is compliant.
If SARS refuses to issue a compliant status, there is usually an underlying problem.
Common reasons include:
- Outstanding returns
- Outstanding debt
- Registration issues
- Verification problems
This should never be ignored.
Warning Sign #5: Accounting Records Are Not Up to Date
Tax compliance begins with proper bookkeeping.
If your accounting records are months behind, your tax compliance may already be at risk.
Without accurate records, it becomes difficult to:
- Prepare tax returns
- Calculate VAT correctly
- Process payroll accurately
- Respond to SARS audits
Good compliance starts with good accounting.
Warning Sign #6: Payroll Obligations Are Not Being Managed Properly
Companies with employees have additional tax obligations.
Common issues include:
- PAYE not submitted
- PAYE submitted incorrectly
- UIF discrepancies
- SDL non-compliance
Payroll compliance is one of the most overlooked areas of SARS compliance.
Warning Sign #7: Nobody Is Responsible for Compliance
One of the biggest risks in small and growing businesses is the absence of accountability.
Many companies assume:
- The accountant is handling it
- The bookkeeper is handling it
- The payroll administrator is handling it
Meanwhile, nobody is actually monitoring overall compliance.
Every company should have a designated person responsible for compliance oversight.
Conduct a Tax Compliance Health Check
To assess your company’s compliance status, review the following:
SARS Registrations
✓ Income Tax
✓ VAT (if applicable)
✓ PAYE (if applicable)
✓ SDL (if applicable)
Tax Returns
✓ All returns submitted
✓ No outstanding periods
Tax Debt
✓ No outstanding balances
✓ Payment arrangements where required
SARS Correspondence
✓ All notices reviewed
✓ Outstanding queries resolved
Accounting Records
✓ Bookkeeping up to date
✓ Financial records complete
Payroll Compliance
✓ PAYE submitted
✓ Employee records maintained
What Should You Do If You Discover a Problem?
Do not wait for SARS to escalate the matter.
The sooner compliance issues are addressed, the easier and less costly they are to resolve.
Typical corrective actions include:
- Submitting outstanding returns
- Updating accounting records
- Resolving tax debt
- Correcting registration details
- Reviewing payroll compliance
- Restoring tax compliance status
The key is acting early.
Compliance Is Not an Annual Event
Many business owners only think about compliance during tax season.
Successful companies take a different approach.
They treat compliance as an ongoing business process.
By regularly monitoring compliance, businesses reduce risk, avoid penalties, and position themselves for growth opportunities.
How Next Generation Accountants Can Help
At Next Generation Accountants, we help companies identify compliance risks before they become costly problems.
Our Tax Compliance Health Check includes:
- SARS compliance review
- Outstanding return identification
- Tax debt review
- Payroll compliance review
- VAT compliance review
- Compliance status assessment
Our goal is simple:
To help your company get compliant and stay compliant with SARS.
Need a Tax Compliance Health Check?
Contact Next Generation Accountants today and let us assess your company’s compliance status before a small problem becomes a major one.
