A SARS audit runs through five stages: a notice of audit, a request for relevant material, the examination itself, a letter of audit findings, and a revised assessment. You have the right to be informed of the scope, to be represented, and to respond to the findings before an assessment is raised. The single most consequential moment is the notice itself — once it is issued for a period, the Voluntary Disclosure Programme is no longer available for that period.
An audit is not a verification. A verification checks documents on one return and takes weeks. An audit examines your affairs and takes months.
Verification vs audit
| Verification | Audit | |
|---|---|---|
| What it is | A check that declared figures are supported | A detailed examination of your tax affairs |
| Scope | Usually one return, specific items | Potentially multiple periods and tax types |
| Duration | Weeks | Months |
| How it starts | A request for supporting documents | A formal notice of audit |
| VDP still available? | Yes | No, for the audited period |
That last row is the one that matters most. If you know there is an understatement in a return, the window to disclose it on favourable terms is before the audit notice arrives. See how to catch up on unfiled books and returns.
What triggers an audit
Most audits are not personal. They are risk-driven.
Escalation from a verification. The most common route. A verification finds something — disallowed input VAT, an unexplained deposit, a deduction without support — and the matter widens.
Third-party data mismatches. SARS receives data from banks, medical schemes, retirement funds, employers, and increasingly from crypto-asset service providers under international reporting frameworks. Where your return does not match what a third party reported, it is flagged.
Ratios outside the norm for your industry. Input VAT high relative to output, expenses high relative to turnover, margins that move sharply, or profitability well below sector norms.
Refunds. Large or repeated refunds attract attention, particularly a first one.
Sector focus. SARS runs targeted campaigns on particular industries and behaviours from time to time.
Reported information. Disputes with former employees, business partners or competitors do reach SARS.
Persistent non-compliance. A pattern of late filing, outstanding returns and unpaid debt raises your risk profile across the board.
The five stages
Stage 1: notice of audit
SARS informs you that an audit has commenced. The notice should indicate the initial scope — which tax types, which periods.
What to do immediately:
Diarise every deadline in the notice
Appoint your representative — your tax practitioner or an attorney — and tell SARS in writing who is acting
Do not destroy or alter anything. Records must be retained for five years, and an audit extends that until the matter concludes
Understand that the VDP door has closed for the audited periods
Stage 2: request for relevant material
SARS requests documents and information. The request should be specific and relevant to the scope.
Respond completely, on time, and in one submission. The same discipline as a verification: everything at once, clearly named, nothing missing. See how to respond to a SARS verification request.
Where a request is unclear or appears outside the stated scope, ask for clarification in writing rather than guessing or refusing.
Where you genuinely need more time, request an extension before the deadline, with a specific reason and a date you can meet.
Stage 3: the examination
SARS reviews the material, and may raise follow-up questions, request further documents, or conduct a field audit at your premises.
During this stage:
Keep every communication in writing where possible, and confirm telephone discussions by email
Answer what is asked. Volunteering unrelated information expands the scope
Be consistent. Contradictions between what you said in month one and month four are the most damaging thing in an audit
Where you find an error yourself, take advice on how and when to raise it
SARS must keep you informed. Under the Tax Administration Act, where an audit extends beyond a defined period, SARS must provide a report on the stage of completion at prescribed intervals.
Stage 4: letter of audit findings
Where the audit identifies adjustments, SARS issues a letter of audit findings setting out the proposed adjustments and the reasons.
This is your opportunity to respond before an assessment is raised, and it is the most important document in the process.
You generally have 21 business days to respond, and this is where the outcome is actually decided. A properly argued response with supporting documents can remove or reduce proposed adjustments entirely.
Take professional advice on this response. It is not a form-filling exercise.
Stage 5: revised assessment
Where adjustments stand, SARS issues a revised assessment showing the additional tax, plus:
Interest at 10.25% per annum from 2 March 2026
Understatement penalties, on a scale from 0% to 200% depending on the behaviour and whether disclosure was voluntary
If you disagree, lodge a Notice of Objection within 80 business days of the assessment, with written reasons and supporting documentation.
Understatement penalties: the scale
The percentage applied depends on the behaviour SARS identifies and whether you disclosed.
| Behaviour | Direction |
|---|---|
| Substantial understatement with a reasonable interpretation | Lowest end, potentially 0% |
| Reasonable care not taken in completing the return | Higher |
| No reasonable grounds for the tax position taken | Higher still |
| Gross negligence | Substantially higher |
| Intentional tax evasion | Up to 200% |
Two factors reduce the percentage materially: voluntary disclosure before notification of the audit — the largest reduction — and voluntary disclosure after notification. Being a repeat case increases it.
This is why timing matters so much. The same error, disclosed voluntarily before an audit notice, can attract full relief from understatement penalties under the VDP. Discovered by SARS in an audit, it can attract a substantial percentage.
Your rights
To be informed of the audit and its scope.
To be represented by a tax practitioner or attorney at any stage.
To be given the audit findings and an opportunity to respond before an assessment is raised.
To object and appeal — a Notice of Objection within 80 business days, then appeal to the Tax Board or Tax Court.
To request suspension of payment where the debt is disputed. Note that this must be applied for — a dispute alone does not stop collection, and without suspension SARS can proceed to a third-party appointment under section 179. See can SARS take money from your bank account.
To complain through SARS's internal process, and beyond that to the Office of the Tax Ombud for service failures — though the Ombud generally requires SARS's own complaints process to be exhausted first, and does not adjudicate the merits of an assessment.
What to do, and what not to
Do:
Appoint a representative early, before you respond to anything substantive
Respond within deadlines, or request extensions before they pass
Keep every communication in writing
Give complete answers to what is asked
Reconcile your own records before submitting anything, so you know what SARS will find
Take the letter of audit findings seriously — it is where the outcome is decided
Do not:
Ignore correspondence. Assessments can be raised on estimate where you do not engage
Volunteer information outside the scope
Alter or reconstruct records after the notice
Argue instead of documenting
Assume disputing the assessment stops collection
Reducing the chance of one
File everything, on time, including nil returns. Persistent non-compliance raises your risk profile across every tax type.
Reconcile monthly. An audit of a business whose bank, ledger and returns agree is an inconvenience. An audit of one where they do not is a serious problem.
Keep source documents attached to transactions. Producing a document pack should be a filter and an export, not a search.
Empty the suspense account every month. Unidentified amounts are the first thing an auditor pulls, and SARS's reasonable position is that unidentified deposits are income until proven otherwise. See what is a suspense account.
Code denied VAT categories separately, so entertainment and motor cars are ring-fenced and cannot be claimed by accident.
Fix known errors voluntarily. The VDP exists precisely for this, and it is only available before the notice.
Frequently asked questions
What happens during a SARS audit? SARS issues a notice of audit stating the scope, requests relevant material, examines it and may ask follow-up questions or visit your premises, issues a letter of audit findings setting out proposed adjustments, and then raises a revised assessment where adjustments stand.
What is the difference between a SARS verification and an audit? A verification checks that specific declared figures are supported by documents, usually on one return, and takes weeks. An audit is a detailed examination potentially spanning multiple periods and tax types and takes months. Critically, once an audit notice is issued the Voluntary Disclosure Programme is no longer available for that period.
What triggers a SARS audit? Most commonly escalation from a verification, third-party data that does not match your return, financial ratios outside industry norms, large or repeated refunds, sector-focused campaigns, information reported to SARS, and a pattern of persistent non-compliance.
How long does a SARS audit take? Months rather than weeks, depending on scope and complexity. Where an audit extends beyond a defined period, SARS must provide reports on the stage of completion at prescribed intervals.
Can I still use the Voluntary Disclosure Programme once an audit starts? No, not for the audited period. The VDP requires the application to be made before SARS issues a notice of audit, inquiry or investigation for that period. This is why voluntary disclosure of a known error should not be delayed.
What are understatement penalties? Penalties on a scale from 0% to 200% applied where a return understates your liability, depending on the behaviour involved and whether disclosure was voluntary. Voluntary disclosure before notification attracts the largest reduction; intentional evasion sits at the top of the scale.
Does disputing an assessment stop SARS collecting? No, not automatically. You must apply for suspension of payment. Where the requirements are met SARS must suspend collection while an objection or appeal is in progress, but without the application SARS can proceed to enforcement including a third-party appointment.
Can I object to a SARS audit assessment? Yes, by lodging a Notice of Objection within 80 business days of the assessment, with written reasons and supporting documentation. If the objection is disallowed, the matter can be appealed to the Tax Board or Tax Court.
Represented from the notice, not from the assessment
The outcome of an audit is largely determined in two documents: the response to the request for relevant material, and the response to the letter of audit findings. Both are far better handled by someone who has done it before.
Smartbook represents clients through SARS audits and verifications, and the underlying monthly work — reconciled books, documents filed against transactions, clean suspense accounts — is what makes an audit survivable rather than existential.
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Audit procedure, response periods and penalty percentages depend on the specific circumstances and the notices issued — always work from the dates and terms in your own SARS correspondence, and take professional advice. General guidance, not advice on your circumstances.
Primary sources: SARS — Short Guide to the Tax Administration Act · SARS — Voluntary Disclosure Programme · SARS — What if I do not agree · Office of the Tax Ombud