The dispute resolution process, as outlined under Chapter 9 of the Tax Administration Act, No. 28 of 2011 (“the TAA”), read together with Part B, of the Tax Administration – Regulations (“the Regulations”), provides the applicable timelines within which such a dispute resolution process must be initiated.
Interpretation of the guidelines can sometimes prove problematic for taxpayers, not being tax or finance professionals in their own right. This has resulted in taxpayers not knowing exactly when they may dispute an assessment issued by SARS and having to seek expert advice thereon, all within the historically permitted 30-day period, from date of the assessment.
Welcome Breathing Room for both SARS, and Taxpayers
After much deliberation, on 10 March 2023, it was confirmed via Government Gazette, that the permitted 30-day period to file a Notice of Objection (“Objection”), has been extended to 80 days. This indulgence by SARS is two-fold from a benefit perspective:
- The extended timeframe within which a taxpayer may dispute an assessment issued by SARS, will aid in achieving SARS’ strategic objective of enhancing accessibility for taxpayers wishing to be voluntarily compliant; and
- Will give SARS the breathing room it needs to clear out its existing backlog, in light of the current inundation of both Objections, and Notices of Appeal (“Appeal”), especially in disputes where the amount concerned is below R1 million rand.
It must however be noted that this “extension” is not an open invite for taxpayers to not be pro-active in regularising or rectifying their tax affairs. The pragmatic taxpayer will be rewarded for immediately seeking assistance from astute tax specialists where they do not agree with an assessment, seeking guidance in lodging a dispute against SARS’ decision.
Strategic SARS Engagement Remains Key
The further timeframes permitted in the Regulations, both prior to the Objection, and post-outcome of the Objection, remain as is, which can be summarised as below:
- A Request for Reasons, must be submitted within 30 days from the date of assessment;
- The period of extension for filing a Request for Reasons, per SARS’ discretion, remains as 45 days; and
- Any Appeal to either the tax court, or tax board, must be delivered within 30 days from delivery of the Notice of Disallowance on the Objection.
It remains possible to request extensions of the above prescribed timeframes, however this is entirely at the discretion of a senior SARS official, and only in very limited circumstances. The risk of a request for extension being denied, is not worth taxpayers being lethargic in approaching the revenue authority to rectify what may very well just be an error in judgement on the part of SARS.
It must be remembered that the substance of a dispute is tax law, which is well known for its fluidity and intricacies. Thus, the dispute process, being a hybridization of the law and SARS’ own protocols, is best handled by seasoned tax attorneys, who task themselves with understanding the nuances of tax law and knowing the most strategic stance to take, capitalising on the remedies afforded by the TAA to ensure favourable outcomes.
Alternate Avenue for Resolution
It is also important to take cognisance of the tax debt relief measures as contained in the TAA, as where a taxpayer does not have legal merits to pursue an objection but has difficulty in settling their tax debt. In such cases, a Compromise of Tax Debt application (“the Compromise”) is always available to the taxpayer.
The Compromise is aimed at aiding taxpayers to reduce their tax liability by means of a Compromise Agreement (“the Agreement”), which is entered into with SARS. Where SARS is approached correctly, and the taxpayer’s financial circumstances warrant it, a tax debt can be reduced, and the balance paid off in terms of the Compromise.
In the end, total tax compliance is the ultimate goal, be it through the rectification of an error by SARS or securing a settlement which is more affordable to the taxpayer in a given instance.
The First-Mover Advantage
To protect yourself from SARS, ensuring compliance remains the best strategy. Where you find yourself on the wrong side of SARS, there is a first-mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally on all fronts.
As a rule of thumb, all correspondence received from SARS should be immediately addressed by a qualified tax specialist or tax attorney, which will serve to safeguard taxpayers against SARS implementing collection measures. Being specialists in their own right, taxpayers will be correctly advised on the most appropriate solution to ensure optimal tax compliance, within the designated timeframes.