If you have not filed your individual tax returns — whether it has been one year or ten — SARS has not forgotten about you. What most people do not realise is that SARS has likely already raised estimated assessments against your name. That means they have guessed what you owe, added penalties on top, and are accumulating interest on the balance every single month. Ignoring the problem does not make it go away — it makes it more expensive.
Whether you are a salaried employee who simply never got around to filing, a freelancer who did not know you needed to register as a provisional taxpayer, or a business owner who fell behind during tough times, there is a path to getting compliant. The key is to act before SARS takes enforcement action — because once they do, your options become much more limited and costly.
WHAT HAPPENS WHEN YOU DO NOT FILE TAX RETURNS
The consequences of non-filing are progressive and cumulative. Here is what happens over time:
YEAR 1: ADMINISTRATIVE PENALTIES BEGIN
After the filing deadline passes, SARS starts charging administrative non-compliance penalties. For individuals, these start at R250 per month for each outstanding return. If you owe tax and have not paid, they add a 10% late payment penalty plus interest at the prescribed rate (currently around 10% per annum).
YEAR 2-3: ESTIMATED ASSESSMENTS
SARS raises estimated assessments based on data they have from your employer, bank, medical aid, and other third parties. These estimates are deliberately conservative — meaning SARS assumes you earned more than you likely did, resulting in a higher tax bill than you probably owe. You then have the burden of proving the estimate is wrong by filing accurate returns.
YEAR 3-5: COLLECTION ACTIONS
SARS escalates to active collection:
- Third-party appointments: SARS directs your employer or bank to deduct outstanding tax directly from your salary or account
- Asset attachments: SARS can seize and sell your assets — vehicles, property, investments — to settle the debt
- Travel restrictions: While SARS cannot directly prevent you from travelling, a judgment against you can affect your credit profile and ability to secure travel facilities
- Credit bureau listings: Outstanding tax debts can be listed on your credit record, affecting your ability to get loans, bonds, or credit cards
BEYOND 5 YEARS: CRIMINAL PROSECUTION
In cases of persistent non-compliance or suspected fraud, SARS can refer the matter to the National Prosecuting Authority. Tax evasion carries penalties of up to R2 million in fines, five years imprisonment, or both.
HOW MUCH COULD YOU OWE?
The actual amount you owe depends on your income, deductions, and how many years you have missed. Here is a realistic example:
Consider a professional earning R500,000 per year who has not filed for three years:
- Estimated income tax: Approximately R130,000 per year x 3 years = R390,000
- Non-filing penalties: R250 per month x 36 months = R9,000
- Late payment penalties: 10% of outstanding tax = R39,000
- Interest at 10% per annum (compounding): Approximately R60,000-R80,000
- Total potential liability: R498,000 – R518,000
This example assumes no additional taxes like provisional tax penalties or VAT obligations, which would increase the amount significantly.
YOUR OPTIONS FOR GETTING COMPLIANT
OPTION 1: FILE ALL OUTSTANDING RETURNS
The most straightforward approach is to file all outstanding returns. You can file returns for previous years via SARS eFiling, and the system is open for multiple years. Gather your IRP5 certificates, bank statements, and supporting documents, then file accurate returns for each missing year.
If you file accurate returns and they show less tax than SARS estimated, the assessments will be reduced. This is the most common way to significantly reduce your liability.
OPTION 2: VOLUNTARY DISCLOSURE PROGRAMME (VDP)
If your non-compliance is more serious — particularly if it involves undeclared income or failure to register as a provisional taxpayer — the VDP is your best option. Under this programme:
- You make a full voluntary disclosure of all outstanding tax obligations
- SARS waives administrative penalties (which can be substantial)
- Interest may be reduced or waived in some cases
- You avoid criminal prosecution
The VDP must be applied for before SARS notifies you of an audit or investigation. Once SARS is actively looking into your affairs, you lose the opportunity for the VDP.
OPTION 3: REQUEST A COMPROMISE OF TAX DEBT
In cases of genuine financial hardship, you can apply to SARS to compromise (reduce) your tax debt. SARS may agree to accept a lower amount if they believe the full amount is unlikely to be collected or would cause severe hardship. This is discretionary and requires thorough financial disclosure.
STEP-BY-STEP GUIDE TO FILING OUTSTANDING RETURNS
- Register for eFiling: If you do not have an eFiling profile, register at sarsefiling.co.za using your ID number
- Check your SARS status: Log in and check which returns are outstanding — they will be listed on your profile
- Gather documents: Collect IRP5 certificates from former employers, bank statements, investment statements, medical aid certificates, and retirement annuity certificates for each year
- File the returns: Complete each return accurately. You can do this yourself or use a registered tax practitioner
- Submit and wait: SARS processes returns and issues assessments. If you owe money, you can arrange a payment plan
- Request a payment arrangement: If you cannot pay the full amount immediately, SARS allows payment plans in some circumstances. Interest continues to accrue, but enforcement actions are paused
COMMON SITUATIONS WHERE PEOPLE FALL BEHIND
RECENT GRADUATES AND FIRST-TIME EARNERS
Many young professionals do not realise they need to file tax returns. If you earned above the tax threshold (R95,750 for under-65s), you are required to file — even if your employer deducted PAYE. SARS does not accept ignorance as an excuse.
FREELANCERS AND SIDE-HUSTLE EARNERS
If you earn money outside of formal employment — whether freelancing, consulting, selling products online, or any other self-employment activity — you are required to register as a provisional taxpayer and submit bi-annual provisional tax returns. This catches many people off guard.
FORMAL EMPLOYEES WHO SIMPLY STOPPED FILING
Some salaried employees stop filing because their employers deduct PAYE and they assume everything is handled. However, you still need to file annual returns to declare other income, claim deductions, and ensure your employer’s PAYE deductions are correct.
BUSINESS OWNERS DURING TOUGH TIMES
Business owners who face financial difficulties often prioritise paying suppliers and employees over filing tax returns. While understandable, this creates a growing tax liability that eventually becomes unmanageable.
HOW FINEDGE PLUS CAN HELP YOU GET COMPLIANT
At FinEdge Plus in Sandton, Johannesburg, our registered tax practitioners specialise in helping individuals and businesses resolve outstanding tax issues. Our services include:
- Comprehensive review of your SARS profile and outstanding returns
- Preparation and filing of all outstanding tax returns (individual and business)
- Voluntary Disclosure Programme applications
- Negotiation of payment arrangements with SARS
- Dispute resolution and objection filing against estimated assessments
- Tax clearance certificate applications
- Ongoing tax compliance management
We handle all interactions with SARS on your behalf, giving you peace of mind and ensuring the best possible outcome.
FAQ
CAN SARS TAKE MONEY FROM MY BANK ACCOUNT?
Yes. SARS can issue a third-party appointment to your bank, directing them to pay your outstanding tax debt from your account. They typically give you notice first, but they do not need your consent to proceed.
HOW MANY YEARS CAN SARS GO BACK?
SARS can generally assess three to five years of returns. In cases involving fraud, misrepresentation, or deliberate non-compliance, there is no prescription period — SARS can go back indefinitely.
WHAT IF I CANNOT AFFORD TO PAY WHAT I OWE?
SARS offers payment arrangements for taxpayers who cannot settle their debt immediately. You can apply for a deferred payment plan, paying in instalments over an agreed period. Interest continues to accrue during the payment period. In cases of genuine hardship, you can apply for a compromise of tax debt.
IS IT TOO LATE TO FILE RETURNS FROM 5 YEARS AGO?
No, it is not too late. SARS eFiling allows you to file returns for previous years. Filing accurate returns is almost always better than leaving estimated assessments in place, as the actual tax owed is usually lower than SARS estimates.
WILL I GO TO JAIL FOR NOT FILING TAX RETURNS?
Jail time is reserved for cases of deliberate tax evasion or fraud. Simple non-filing typically results in financial penalties. However, ignoring SARS communications and failing to engage can escalate matters. The safest approach is to address the situation proactively with professional help.
