Sars Dispute Rules

A taxpayer aggrieved by an assessment or decision may contest that decision. To challenge the outcome of the assessment or decision, a specific procedure must be followed within 30 working days of the date of the assessment. Tax dispute resolution is the territory of smart tax lawyers who set themselves the task of understanding the nuances of tax law and knowing what strategy to follow in order to use the legal remedies offered by the rules to achieve favorable results. We provide individuals, businesses and high net worth taxpayers with technical tax assistance in the event of SARS litigation. This also includes support for the preliminary examination phase at the Tax Court. Our team of experts, led by tax professional Jerry Botha, is comprised of chartered tax lawyers, tax practitioners, legal tax advisors and chartered accountants who have saved taxpayers millions of dollars in taxes, penalties and unjustified interest through the tax settlement process. In addition to being a victory for the taxpayer, it is an important judgment in maintaining the integrity of the tax dispute resolution process. The taxpayer was established in March 2020 for its 2016-2018 taxation years. In the contentious procedure following the delivery of the liquidity, namely the reasoned request and the opposition and the appeal, the taxpayer complied with the relevant rules.

Overall, SARS could not prove reasonable reasons for its delay, the delay caused serious harm to the taxpayer, and SARS had little chance of success in the central litigation. Judge Cloete therefore held that the taxpayer should be granted his final disposition on the basis of SARS`s breaches. By mutual agreement, SARS and the objecting taxpayer may attempt to resolve the dispute through Alternative Dispute Resolution (ADR) in accordance with the procedures set out in the Rules. This procedure creates a structure with the necessary control mechanisms within which disputes can be resolved or resolved. ADR is less formal and less costly than court proceedings and allows disputes to be resolved in a much shorter period of time. It also creates a more cost-effective remedy for resolving tax disputes. The recent case of F Taxpayer v. SIRC (Case No.: IT 45842, 25 February 2022) (Case F Taxpayer) established whether SARS delays in initiating the dispute settlement procedure under the TAA, resulting in the late filing of reasons under Rule 31 and the dismissal of the appeal, justified a definitive prohibition of SARS to pursue the dispute. He also noted whether the taxpayer should obtain a final decision on the appeal for the relevant taxation years based on SARS failures. There are comprehensive rules enacted under section 103 of the Tax Administration Act 2011 (the “TAA” and the “Rules”) governing the procedure for resolving tax disputes between taxpayers and the Commissioner of the South African Revenue Service (“SARS”).

The rules provide timelines and procedures to ensure that disputes between taxpayers and SARS are simplified, timely and dealt with fairly. It is beneficial to both SARS and taxpayers if disputes are resolved in a timely manner and in accordance with the comprehensive legislation that governs them, and the court has recognized this. As a result, taxpayers are often considered “non-compliant” during the lengthy dispute resolution process, which can have a serious impact on a taxpayer`s day-to-day operations. The court attached great importance to this, finding that the suspension of the payment procedure and the time and costs required for the taxpayer to force SARS to comply with its legal obligations, as well as the fact that the taxpayer was also unable to manage some of its financial affairs with a reasonable degree of predictability, for it was not clear, whether their dispute with SARS was resolved in their favor was seriously prejudicial. The Court noted that none of the taxpayer`s allegations about SARS had been meaningfully challenged. In particular, the Court found that: After an audit, SARS collected additional assessments for the taxpayer`s 2016 to 2018 taxation years. The taxpayer initiated the dispute resolution procedure by requesting reasons. SARS did not respond within the 45 days prescribed under subsection 6(5) of the Regulations. If SARS does not allow the taxpayer to appeal, Rule 10 gives the taxpayer 30 days to appeal the SARS decision. When lodging the appeal, the taxpayer must indicate whether he wishes to participate in the dispute resolution procedures (ADR).

“[21] In summary, SARS consistently failed to meet regulatory timelines. It is of particular importance that it did not request the additional time it needed to inform the taxable person of the reasons before the expiry of the time limit; the fact that he did not request an extension to file his declaration under rule 31 before the expiry of the prescribed time limit; failure to provide the taxpayer with an explanation for these delays; and his woefully inadequate widespread statement, delivered 10 days later, that the case had only been assigned to Mukwehvo after the deadline for filing the declaration under Rule 31 had expired “due to the backlog due to Covid-19, lack of capacity and lack of filling vacancies in SARS”. (emphasis added) The dispute resolution procedure under Law 28 of 2011 on Tax Administration (TAA) and the Tax Court Rules (Rules) is intended to enable SARS and taxpayers to deal with the subject matter of the dispute in a structured manner in order to defuse the dispute between the parties. This maximizes the possibility of narrowing the scope of the disagreement and eventually resolving the dispute. We are resolving SARS issues more quickly and our strategy is ensuring a positive outcome, almost always in the Tax Court. We provide incorporated taxpayers with technical tax assistance in the event of SARS litigation. Our astute approach includes compliance with tax legislation and related legal requirements, proactive and optimal tax planning, and legal assistance in defensible cases before and before the Tax Court. The resolution of tax disputes is just that, a legal procedure like any other. It should be remembered that the content of these disputes is tax law, which is known for its fluidity and subtleties. It is also important to take note of the deadlines prescribed in the rules.

Failure to meet these deadlines means that the taxpayer must seek tolerance for SARS, which complicates and unnecessarily prolongs the dispute. A manual procedure is used to challenge the Commissioner`s decisions on applications for exemption from income tax, Section 18A licences and exempt institutions incorporated in trust. The dispute resolution form to be used is the manual notice of objection (ADR1), which can be submitted via: Rule 6 gives taxpayers the opportunity to request a justification for the assessment within 30 days of the date of assessment. It is always advisable to make a request for justification, as this will help the taxpayer to formulate his objection. It is important to frame the request in such a way that it receives a meaningful SARS response that will give you the information you need to create a solid basis for resolving the dispute.