Keeping track of clients' tax compliance status
How a South African accounting firm can watch each client's SARS tax compliance status, catch the triggers early and handle good-standing PINs.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
A client wins a large contract, and the buyer's procurement team asks for proof of good standing with SARS by Friday. The client forwards the request to the firm on Thursday afternoon. The firm logs in and finds the status is non-compliant, because of a provisional tax return nobody remembered and a small debt on the VAT account.
Most firms discover a client's compliance problem this way: at the moment the client needs the status, not before. This article explains why the status moves, which triggers to watch, and how a firm can check clients routinely so that a request like that one is a formality.
Why the status changes
SARS says a tax compliance status is not static: it changes with the taxpayer's continued compliance, and taxpayers can view it through My Compliance Profile on eFiling.
A client that was compliant in March can be non-compliant in May without anything dramatic happening. A return falls due and is not filed; an assessment raises a debt; a registration detail changes and is not updated. The status follows those events, so checking it once a year is checking it too rarely.
The four triggers
SARS says that to be tax compliant, a taxpayer must have:
| Requirement | What usually goes wrong |
|---|---|
| No outstanding returns | A return for a tax type the firm does not handle, or a period missed during a change of accountant |
| No outstanding tax debt, unless a payment arrangement or suspension is agreed | Penalties or interest the client did not know about; a payment allocated to the wrong period |
| Registration for every tax it is liable for | A client that started employing staff or passed a VAT threshold without registering |
| Up-to-date registered particulars | A new address, bank account or public officer not updated with SARS |
The first row explains many surprises. A firm may prepare a client's annual return and statements while the payroll is done by a bureau and VAT by the client's own bookkeeper. Each party watches its own piece, and nobody watches the whole profile.
Good standing and the PIN
SARS says the Tender option for tax compliance status no longer exists, and that taxpayers must instead use the Good Standing application, which gives a PIN that third parties use to verify compliance on eFiling.
Clients still ask for a "tax clearance" or a "tender certificate". What they need is a PIN that the other party can verify. Two practical points follow. The PIN is only useful while the status behind it is good, so an old PIN is not a substitute for a current status. And the person asking, whether a buyer, a funder or a landlord, verifies it themselves, which is why the underlying status has to be right first.
Where it bites hardest
For payroll clients, there is a monthly cost to a bad status. SARS says that when an original EMP201 is requested, its system checks the employer's tax compliance status, and a non-compliant employer cannot offset the Employment Tax Incentive against its PAYE liability. That consequence is covered in why a client's tax status can block its ETI.
A routine check, built into the work
The control that works is a recurring check owned by a named person, with a record of what was found. In Achekam, this fits naturally into work items. Each work item lists the procedures to perform and the documents required, and a step is marked done only with a written response and its documents, or set aside with a reason; steps are never deleted.
A compliance check work item for each client might carry three procedures:
- Open the client's compliance profile and record the status, with a screenshot or note of what it shows.
- If non-compliant, list each reason shown and who is responsible for clearing it.
- Write to the client with the findings and record the reply.
The work lands on the responsible person's list. Each professional has a My Work list and a Professional Inbox, and the Supervision, Manager and Partner desks show their level's review queue, returned work and risks. A manager can therefore see which checks are overdue without asking.
How often to check depends on the client. Monthly suits payroll clients claiming ETI and clients bidding for contracts; quarterly may be enough for a quiet holding company.
Onboarding: catch the gaps on day one
Many compliance problems are inherited. A new client arrives with a return outstanding from before the firm's time, or without a registration it needs.
The Onboarding page in Achekam shows a readiness checklist for each new client, built from what Achekam holds about the client, and offers "Mark active" only when every item is met. The items include the client's registration and income tax numbers, an active service, a contact, an engagement and an account manager. A client cannot be marked active with its income tax number missing, which is the moment to ask about the compliance profile as well. Add a first compliance check to the onboarding work, so the firm knows the starting position before it takes responsibility for anything.
The firm still files on eFiling itself; how the work and its records fit together is covered in exporting and tracking client tax work.
SARS's own explanation
SARS's page on managing your tax compliance status explains how to request and manage a status and PIN, including the Good Standing option. Send it to clients who ask for a "clearance certificate", and set up the first round of checks before the next request arrives on a Thursday afternoon.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
