Dispute resolution with the South African Revenue Service (SARS) generally has a two-pronged approach. Firstly, taxpayers must present their case on the merits – this will include the factual basis and background that has led to the dispute. Secondly, and equally important (if not more so), is the procedural process. This deals with timeframes, form requirements, notices of delivery etc. The procedural aspects are dealt with in the Tax Administration Act (in the Act itself and further in dispute resolution rules promulgated in terms of the Act). The procedural process to an objection is crucial since non-compliance can result in a negative outcome for the taxpayer, despite having very strong merits. The following are some of the more important procedural aspects:
Timeframe: Assessments must be objected to within 30 days after the date of an assessment. Where reasons have been requested for an assessment, the objection must be delivered within 30 days after receipt of the reasons. Importantly, “days” are business days (days other than Saturdays, Sundays, public holidays and the period between 16 December and 15 January of the following year annually).
Forms: Depending on the tax type (income tax, VAT, PAYE, etc.), SARS prescribes certain forms that must accompany the objection. For taxpayers who can submit disputes via eFiling, there is a guided process that populates the correct form. For taxpayers who do not use eFiling, manual forms are available on the SARS website.
Address: If eFiling is not used, taxpayers must specify an address where SARS’s decision of the objection or other documents can be delivered. The taxpayer who makes use of eFiling must always ensure that their most recent and up to date particulars(physical address, email address, contact persons etc.) are captured on the system, to ensure proper delivery of documents.
Grounds: The grounds on which the taxpayer objects are crucial, since a taxpayer may not appeal on a ground that constitutes a new ground of objection (if the dispute goes past the objection phase). Objections should therefore not only deal with the principal matter at hand but also any understatement penalties, provisional tax penalties and interest.
After the objection has been submitted, SARS is allowed to request additional substantiating documents to make a decision on the objection, these documents must be delivered to SARS 30 days after the request. If no additional documents have been requested, SARS has 60 days within which to consider the objection. If they did request documents, they are afforded a period of 45 days after delivery of the requested documents.
The above merely sets out the basics in terms of the procedural requirements for objections to assessments. Despite the standardised forms and prompts that have been included on SARS eFiling to assist taxpayers with objections, they are strongly advised to seek advice from a tax practitioner when entering the dispute resolution process, since dispute resolution has become a specialist field, which requires a hands-on approach.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or ommissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.