Taxpayers who are aggrieved by an assessment or decision by SARS have various remedies at their disposal to challenge such assessment or decision. One of those remedies, and perhaps to most well-known remedy, is the remedy of objection and appeal. It often happens though that this remedy is not available for many reasons – too much time has lapsed and the assessment or decision in question is not one that is subject to objection and appeal, for example. But is there another way?
Indeed, there often is. In fact, the Tax Administration Act[1] (“the TAA”), provides several remedies to taxpayers to challenge an assessment or decision and depending on the circumstances, these remedies, referred to as remedies other than objection and appeal, may even be more effective or may in fact be prescribed in the alternative to the objection and appeal remedy. Three of these are briefly discussed below.
Requesting a reduced assessment: Pre-prescription
The Tax Administration allows taxpayers to simply request SARS to make a reduced assessment without having to object. Bear in mind that if an assessment has been raised by SARS that, say, creates a tax liability, often the only way of getting rid of the liability is getting a reduction to the assessment that caused it. Unlike the remedy of objection and appeal, this remedy is not as strictly regulated by time periods. For example, when objecting, the taxpayer must object within 30 business days from the date of assessment.
When requesting a reduced assessment, taxpayers effectively have a period of either 3 or 5 years from the date of assessment (depending on whether the assessment in question is an assessment by SARS or a self-assessment respectively) to rely on this remedy. However, as, I am sure, you can imagine, this leniency on the time periods comes with some “terms and conditions”. These “terms and conditions” come in the form of the circumstances under which this remedy is available. In short, the remedy is available if an assessment contains a readily apparent undisputed error. I can almost hear you ask – what does that mean? Suffice it here to state that there are some quite different views in the industry as to what exactly that means. Suffice it further to state that in our view, the meaning of these words “readily apparent undisputed error” is much wider than what SARS, from time to time, purports it to be.
Requesting a reduced assessment: Post-prescription
This remedy allows taxpayers to request a reduced assessment even after the assessment in question has prescribed. It is effectively available indefinitely. In other words, there is really no time period within which the taxpayer must rely on this remedy. However, this leniency is governed by stricter “terms and conditions”, which also come in the form of the circumstances under which it is available. Probably the most relevant circumstances under which this remedy is available is if the assessment in question that the taxpayer seeks a reduction of is based on a processing error by SARS. Again, the exact meaning of these words is somewhat shrouded in mystery. SARS seems to think it is available only where an assessment contains typographical errors and mistakes such as double counting. Naturally, we hold a slightly different view.[2]
Requesting a review of a decision by SARS
This remedy that seems to be one that very few taxpayers and even tax practitioners seem to know of. Yet, it is a very useful and very important remedy. In short, it allows taxpayers who are not happy with a decision SARS has made to request SARS to reconsider its decision (akin to an internal review process). However, it only applies where that particular decision by SARS which the taxpayer is unhappy with, is not subject to objection and appeal. A few examples of some decisions by SARS that are not subject to objection and appeal include, for example, a decision by SARS not to issue a tax clearance certificate, or a decision by SARS to reject an application for VDP relief or a decision by SARS not to allow a request for a reduced assessment.
Above we have highlighted only three remedies available to taxpayers that are not objection and appeal. There are several others and indeed all of them come with their own “terms and conditions”. Knowing what they are, when they are available, when not and indeed when to use them in combination/(s) can make them extremely powerful in fending off an assessment or decision by SARS. Unicus Tax specialises in tax dispute resolution. We know and understand that when it comes to a dispute between taxpayer and SARS, there is more than one way to skin the cat – which is part of the reason why we have an impeccable track record of resolving tax disputes in favour of taxpayers.
[1] 28 of 2011
[2] See for example views expressed by our founder in Practical Guide To Handling Tax Disputes which has been published by Lexis Nexis.