Mpisane used forged invoices - witness

2013-05-02 22:35
Shauwn and S'bu Mpisane (Picture: City Press)

Shauwn and S'bu Mpisane (Picture: City Press)

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Durban - Durban businesswoman Shauwn Mpisane first tried to fight a tax penalty before seeking to reduce the tax payable using forged invoices, the Durban Regional Court was told on Thursday.

SA Revenue Service (Sars) auditor Waheeda Osman testified the penalty was on Mpisane's late payment of tax on a R47m dividend declared by her firm, Cleaning Maintenance and Transport CC.

She said Mpisane had initially objected to the 100% tax penalty levied.

The court heard that Mabongi Flora Junior, Shauwn Mpisane's business, had declared a dividend of R10.5m in 2007 and in the following year it had declared a R47m dividend.

Mpisane is accused of inflating invoices by more than R5m in a bid to cut her tax bill.

She is also accused of violating the Close Corporations Act by remaining the sole member of Zikhulise Cleaning, Maintenance and Transport CC when she had a previous fraud conviction. She has pleaded not guilty.

According to Osman, regulations stipulated that tax on the dividend should have been paid to Sars within a month of being declared, but this had not been done and had led Sars to impose a 100% tax.

At the time the tax on dividends, known as the Secondary Tax on Companies (STC), was 10%, meaning Mpisane would have had to pay an additional R1m and R4.7m penalty respectively.

Osman said Mpisane initially only objected to the penalty tax being imposed, saying she had a deferred tax agreement in place.

However she never provided proof of this agreement.

Lifestyle audit

According to Osman, Mpisane's accountant then submitted new annual financial statements that reduced Zikhulise's profit from R74m down to R44m.

It also reduced the dividend from R47m to R27m, which would have also reduced the STC.

This, she said, would have cut the tax payable by Zikhulise from around R23m to about R15m.

Osman said the profit had been reduced by eliminating Mpisane's loan account with Zikhulise and attributing the amounts that had been in the loan account to cash purchases of R16.6m and salaries worth R12m.

She said loan company loan accounts to company owners - Shauwn Mpisane is the sole member of Zikhulise - were generally treated as dividends and taxed accordingly, unless the owner repaid the loan to the company within the tax year.

Osman said she tried to verify the invoices that Mpisane's accountant had supplied to her by matching them up with the VAT returns of the vendors who had supplied services to Zikhulise.

Not all of the vendors had co-operated with Sars in the time she had available, but one of those that did was the owner of DSD Trading cc, trading as Eveready Brick and Block.

"He said to me these invoice numbers are being used in 2010. He did not generate these invoices. He said these invoices were a forgery," she said.

The invoices submitted to Sars had been for the 2008 tax year.

Osman said Sars investigated Mpisane after conducting a lifestyle audit of her husband Sbu Mpisane.

Osman said the Mpisanes accepted the findings of the audit of Sbu Mpisane "and the account [to Sars] was paid in full".

She said the audit covered the tax years 2003 to 2008, when Sbu Mpisane was a constable with the Ethekwini metro police.

Read more on:    shauwn mpisane  |  durban

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