We represented the taxpayer in the recent case of F Taxpayer vs SARS – bit.ly/3hqEL8P. (Tax court judgments are anonymous and the taxpayers’ identities themselves are never disclosed.)
The taxpayer was confronted with additional assessments for three tax years, and which came about as a result of SARS refusing to allow deductions claimed towards insurance premiums paid. The taxpayer engaged with SARS in the prescribed dispute resolution process in order to have the dispute resolved. It initially requested reasons for the assessments, later objected against the assessments after receiving those reasons, and thereafter mounted an appeal.
Throughout, though, the dispute process – which contains strict timelines – was delayed, not as a result of the taxpayer’s actions, but due to SARS regularly failing to meet the relevant, prescribed deadlines. To be fair, we often encounter this in practice, and one is required to be patient, collegial and amicable when dealing with reasonable delays. That being so, capacity constraints cannot result in consistent delays becoming the new norm and SARS remains responsible to ensure the speedy and proper administration of administrative justice in tax related matters, which involves it itself also keeping to those prescribed timelines that taxpayers are also bound to.
Due to these repeated delays, the taxpayer ultimately approached the tax court, not to adjudicate the appeals themselves as much, but to hold SARS in default as a result of the matter not being conducted by it within the timelines that it should have. Had it not been for the fact that the taxpayer was also prejudiced throughout, one may have had more sympathy with SARS, however SARS consistently and, by its own admission, unlawfully, indicated the taxpayer as being non-compliant in relation to its tax affairs due to the disputed tax debt not being paid, despite SARS having approved the suspension of payment of the disputed tax debt some time ago.
Again, it does not appear as though malice was present on SARS’ side; however, the taxpayer was prejudiced because of being incorrectly indicated by SARS as “non-compliant” in relation to its tax affairs. Many of the taxpayer’s service providers therefore sought to cancel their professional relationship with the client as a result. The taxpayer was therefore left with very little choice but to approach the tax court to put an end to this process, which seemed to be going around in circles. Ultimately, the judgment is a victory for taxpayers in that it emphasizes that not only taxpayers are bound to procedural timelines in tax disputes, but that SARS too is required to keep strictly to these timelines.