Voluntary Disclosure Programme: Don’t Assume It’s Voluntary—Here’s When SARS Disagrees
The Voluntary Disclosure Programme (VDP) is often pitched as a “get-out-of-jail” option for taxpayers who’ve slipped up. But not so fast. Just because you want to come clean doesn’t mean SARS will accept it as voluntary. And if you get that part wrong, there’s no safety net—just penalties, interest, and potentially prosecution.
If you’ve been receiving undeclared income—whether from rental property, overseas clients, crypto, side gigs or business activities—VDP might offer a clean slate, but only if the disclosure is truly voluntary, complete, and submitted correctly.
Let’s break down what makes a disclosure truly voluntary, what you need to disclose, what relief SARS may grant—and in which cases SARS is likely to reject your VDP application.
When Is It Truly Voluntary? SARS and the Courts Weigh In
The Tax Administration Act (TAA) says a VDP application must be made voluntarily. But what does that really mean?
The Supreme Court of Appeal (SCA) answered that in Purveyors South Africa Mine Services (Pty) Ltd v CSARS (2021). In that case, the taxpayer reached out to SARS for help (on a VAT matter), received instructions, and only a year later applied for VDP.
SARS rejected the application—and the courts upheld that decision.
“The language used in the section clearly indicates the legislature’s intention to arm the Commissioner with extensive powers to prevent taxpayers from disclosures which are neither voluntary nor complete in all material respects…”
The Court made it clear:
- A VDP must be made before SARS contacts you about the issue;
- Even asking SARS for informal advice may disqualify your application;
- The disclosure must come “out of your own volition” and “without any prompting.”
Bottom line: If SARS has started an audit, sent you a compliance letter, or you’ve already spoken to them about the issue, it’s likely too late to apply.
Q&A: When Will SARS Likely Grant (or Reject) a VDP?
| Scenario | Will VDP Likely Be Granted? | Why or Why Not? | Status |
|---|---|---|---|
| You received undeclared foreign income but SARS hasn’t contacted you yet | ✅ Yes, likely | Voluntary and complete disclosure before any SARS intervention | ✅ |
| You forgot to declare local rental income for three years, and SARS hasn’t queried it yet | ✅ Yes, if fully disclosed | Qualifies as a default, and SARS is unaware | ✅ |
| You contacted SARS last year for advice on the same issue you’re now disclosing | ❌ No | Prior engagement disqualifies your disclosure as being ‘voluntary’ | ❌ |
| You missed several VAT submissions, but no audit has started | ✅ Yes | Late filings qualify as defaults if SARS hasn’t intervened | ✅ |
| SARS recently sent you a compliance verification letter | ❌ No | The process has already started—your VDP won’t be seen as voluntary | ❌ |
| You want to fix a PAYE calculation mistake from last year, and no one’s flagged it | ✅ Yes | If disclosed in full before SARS steps in | ✅ |
| You’re hoping to recover a tax refund through VDP | ❌ No | The VDP is not available to correct overpayments or claim refunds | ❌ |
| You were audited last year, but now want to declare extra undeclared income | ❌ No | Once SARS is investigating, the window for a voluntary disclosure closes | ❌ |
What Must Be Disclosed? The Legal Requirements
According to section 227 of the TAA, your VDP application must meet all of the following requirements:
| Requirement | What It Means |
|---|---|
| Voluntary | Done before SARS contacts or investigates you |
| Full and complete | All material facts must be disclosed—amounts, periods, parties involved |
| In the prescribed manner | Submitted through eFiling’s VDP tab or directly to SARS’s VDP Unit |
| Relates to a default | Must involve a breach—e.g., undeclared income, missed VAT, unpaid PAYE |
| Tax type governed by SARS | Must relate to a tax administered under a tax act (Income Tax, VAT, Customs, etc.) |
If you submit a partial disclosure, use the wrong channel, or apply after SARS has already begun investigating, your VDP will likely be rejected.
What Penalties Can Be Waived?
If your VDP is successful, SARS will still require you to pay the tax owing and interest, but will waive the following penalties:
1. Understatement Penalties (Section 223 of the TAA)
These are penalties SARS normally applies when a taxpayer understates their income or misleads SARS:
| Behaviour | Normal Penalty | VDP Outcome |
|---|---|---|
| Substantial understatement | 10% | Waived |
| Reasonable care not taken | 25% | Waived |
| No reasonable grounds | 50% | Waived |
| Gross negligence | 100% | Waived |
| Intentional tax evasion | 150% | Waived |
Without a valid VDP, you could be hit with up to 150% of the tax shortfall—on top of the tax and interest.
2. Administrative Non-Compliance Penalties (Section 210 of the TAA)
SARS often applies these for:
- Failure to register for tax types (e.g., VAT, PAYE)
- Failure to file returns
- Late payment or non-payment
A valid VDP wipes these penalties clean too.
3. Protection from Criminal Prosecution (Section 229 of the TAA)
If your disclosure qualifies under VDP, SARS won’t refer the matter for criminal prosecution. This is especially critical in cases involving:
- Tax evasion
- False declarations
- Fraudulent omissions
This makes the VDP not just a tax relief tool, but a powerful legal shield.
Be Cautious Before You Apply
Too many taxpayers rush into a VDP thinking it’s a guaranteed fix. But the legal requirements are strict, and SARS actively rejects non-compliant disclosures.
Here’s how to protect yourself:
- Don’t contact SARS first. Asking for advice on your tax error before applying may disqualify your VDP.
- Disclose everything. SARS expects complete and honest disclosure across all tax types and years involved.
- Use the correct channel. Don’t email your usual SARS agent—submit the application via eFiling or the dedicated VDP Unit.
Final Thoughts
The VDP is a powerful mechanism for taxpayers who’ve made genuine mistakes—but it only works if you apply at the right time and in the right way. SARS, backed by the courts, has made it clear: a disclosure is only “voluntary” if it comes before they’ve started investigating.
At On Q, we’ve helped many clients correct past non-compliance with valid, accepted VDP applications—but we’ve also seen how one misstep can ruin the process.
If you’re unsure whether you qualify, it’s worth getting professional help before applying. One conversation could mean the difference between protection and penalties
Disclaimer: This article is intended for general information purposes only and does not constitute professional tax advice. For tailored guidance, please speak to a registered tax practitioner.