ITC JANUARY 2022 SOLUTION PAPER 4 QUESTION 2 2 © SAICA 2022

Part (b) Discuss whether the company has any grounds to request the remittance of the penalty imposed by SARS for the late payment of provisional tax.

ANSWER

Here are the key points in a nutshell:

Good arguments for Barista:

• Financial hardship: Barista can argue it was facing "serious financial hardship" due to Covid-19, and chose to pay employee salaries instead of tax to keep the business running.

• Covid-19 as a disaster: The pandemic itself could be classified as a "natural or human-made disaster," which is a valid reason for a remission request.

Bad arguments for Barista:

• Audit delay: A delayed audit is not a valid reason for late payment.

• "Bona fide error": This defense won't work because the inaccurate tax estimate was a deliberate choice, not an accident.

• "First time" penalty: Barista has been penalized before for late VAT payments, so this isn't a first offense.