Procedural error by SARS let’s a taxpayer off the hook

Written By: Schalk WP Pieterse and Willem Lombaard, City Press, 2018-05-29
(Schalk Pieterse, who specialises in tax matters, is a co-founder and director of Port Elizabeth-based Strömbeck Pieterse Attorneys. Willem Lombaard is the managing director of Tax Risk Underwriting Managers, which offers low-cost tax risk insurance products, underwritten by the Hollard Insurance Company, to fund taxpayers’ representation in disputes with Sars.)

We often hear about procedures not being followed correctly by SARS, commonly known as due process. But less often about taxpayers’ successfully contesting a decision made by SARS when there are errors in procedure. The fact is that errors ARE made by SARS which can result in the taxpayer’s re-assessed tax bill being invalidated – in other words, thrown out.

Administrative justice ensures that government interacts fairly and justly with citizens. The rights of an individual are also firmly entrenched in the Constitution. So if the government doesn’t adhere to the legal process in terms of tax collection, your clients should be freed of an obligation to pay the amount, whether the tax return has been re-assessed correctly or not.

Recently in a case before the Tax Court in Port Elizabeth, Tax Attorneys, Dr Daniel N Erasmus and Schalk Pieterse, (co-authors of the article below) acted on behalf of a taxpayer. The case exposed how SARS ignored its own procedural responsibilities as laid out in the Tax Administration Act.

The result was SARS not only had to forgo the receipt of the tax but ran up substantive legal bills. This was because they were in contravention of Section 42 of the Tax Administration Act, in which the commissioner is required to provide the taxpayer with progress reports of the audit and a Letter of Findings. As a result, the taxpayer could not respond to the findings, which meant his/her constitutional rights were contravened.

If this is the first you have heard of the tables being turned, Accountants and Tax Practitioners nationwide say it is far more prevalent than we think.

However, taxpayers generally have neither the resources nor the knowledge to take SARS to court. Disputing an audit is not only extremely costly but also time-consuming.

Read the full news article here

Tussling with administrative injustice?

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