Patricia Williams, head of the tax dispute resolution and controversy management division at Deloitte, says while a Service Monitoring Office (SMO) within Sars does exist, it only deals with problems of a procedural nature.
Additionally, a Tax Ombud, which according to the Tax Administration Act, has to be appointed by October 1 this year, will only have jurisdiction over procedural issues and not over the technical merits of a case, such as the interpretation of the law or the accuracy of a tax assessment.
Williams says a settlement division could be staffed by dedicated Sars officials, with suitable skills from a legal perspective, but who would also understand evidentiary difficulties, how long the matter will drag on if taken to court and who would be able to perform a cost-benefit analysis.
Often foreign clients, especially those with a holding company in the US, indicate that the impact of the uncertainty of a dispute with Sars on their share price is so severe that they have no choice but to concede and pay, or settle, even if they are positive that their interpretation is correct.
Williams says with settlements, parties are able to make concessions.
The matter can be viewed more broadly and parties don’t have to accept each other’s interpretation of the facts or the law of the matter – a settlement can be reached on a different basis that parties believe is fair.
Sars would not be compelled to treat the matter in a way that is consistent for all taxpayers, so it would be faster and more flexible, Williams says.