Tax dispute resolution is the process of challenging something SARS has done that a taxpayer is not happy about. The process can take many forms but the most widely used process is that of objection and appeal.
What is a SARS objection?
The word objection, by definition, is an expression of disapproval. In context, it’s an expression of a taxpayer’s disapproval about something SARS has done in an attempt to get SARS to undo whatever it is the taxpayer is not happy with.
A taxpayer wishing to challenge something that SARS has done must (with a few exceptions not detailed here), as a first step, object.
Contrary to popular belief, though, taxpayers cannot express their disapproval through this process to anything SARS has done. The process of objection is confined to a taxpayer’s disapproval of an assessment raised by SARS and certain decisions taken by SARS.
The word “assessment” is the word used in tax law to describe the document SARS must raise in order to collect tax. Think about an assessment as an invoice that requires payment. As with invoices, assessments can and often is wrong. It might for example overstate the tax liability, understate a loss, understate the refund etc. If an assessment is wrong, you can object to it with the aim of reducing the tax liability, correcting an assessed loss and reinstating the full refund etc.
There are strict timelines within which taxpayers must lodge an objection. Failing to abide by the same may result in the taxpayer forfeiting the right to object.
As mentioned above, taxpayers can also object to certain decisions by SARS. Decisions are not assessments. They are decisions SARS take that in some ways have bearing on the taxpayer but more often than not, the decision in and of itself does not create a tax liability. For example, a decision by SARS not to allow a taxpayer to register for VAT. In and of itself, that decision does not create a tax liability. This is an example of a decision a taxpayer may object to. Examples of decisions that a taxpayer cannot object to are decisions by SARS not to issue a tax clearance certificate/pin or a decision by SARS not to grant payment arrangements. The mere fact though, that these decisions are not subject to objection does not mean the taxpayer is without recourse if the taxpayer is aggrieved by those decisions. It just means that the objection process is not available.
After an objection is submitted, SARS will determine whether the taxpayer’s grievance about the assessment or decision is justified based on written representations made by the taxpayer and if so, they will allow the objection and rectify assessment/decision. If they believe it is not justified, they will disallow the objection, meaning the assessment or decision placed under objection will not be altered.
What is a SARS appeal?
Appeal is the next step in the tax dispute resolution process if SARS did not allow the taxpayer’s objection. It is a further opportunity for taxpayers to express their dissatisfaction with SARS’ assessment or decision.
Like with objections, there are strict time periods within which this step must be taken. Failing to abide by these timelines can again result in the taxpayer forfeiting the right to challenge the assessment or decision.
Appeals are not appeals against SARS’ decision not to allow an objection. Rather, it is a further opportunity for a taxpayer to express their dissatisfaction with the assessment or decision in an attempt to get the assessment or decision overturned. Only this time, the taxpayer’s dissatisfaction will be dealt with differently – in a different “forum”, if you will.
When on appeal, in the context of tax dispute resolution, the taxpayers can decide whether they want their grievances heard and decided on by an independent third party (a judge in the case of the dispute proceeding to Tax Court, or the chairperson of the Tax Board in the case of Tax Board proceedings) or the taxpayer can attempt to resolve the tax dispute in a process similar to mediation (referred to as Alternative Dispute Resolution or “ADR”) between the taxpayer and SARS.
ADR has the advantage of being cheaper and quicker (in most cases) compared to litigation in the tax board or tax court. However, unlike in the case of litigation, there is no independent third party who makes a decision on whether the taxpayer or SARS is correct. The aim is for the parties to meet and discuss the issues and either reach an agreement or settlement.
The tax dispute resolution process is strictly governed by a set of rules, colloquially known as the “tax dispute resolution rules” which are published in the Government Gazette in terms of the Tax Administration Act, 28 of 2011 (“the TAA”). These rules set out various time periods and obligations on taxpayers and SARS as well as regulating each step in the dispute resolution process.
Unicus Tax Specialists SA, a tax-exclusive service firm, has tax dispute resolution experts who always have, at the time of writing, managed to finalise tax disputes to the satisfaction of clients. In doing so, Unicus Tax has saved its clients literally hundreds of millions of rands in indue taxes, penalties and interest. The Our founder, Nico Theron, a Chartered Tax Advisor (SA), is the author of a book published by Lexis Nexis titled: Practical Guide To Handling Tax Disputes in which he explains the rules, time periods and all remedies available to taxpayers under the TAA (including objection and appeal) to challenge SARS’ assessments and decisions. Unicus Tax is exceptionally well placed to deal with tax disputes.
