A client was audited for 5 years and issued very harsh penalties for tax outstanding. What is the process to personally disputing the penalties and the normal dispute procedure on efiling was handled by the same auditor that did the audit and she is defin
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
An understatement penalty is typically imposed by way of a normal assessment (an IT34). Section 224, of the Act provides that the imposition of an understatement penalty under section 222 or a decision by SARS not to remit an understatement penalty under section 223(3), is subject to objection and appeal under Chapter 9. It therefore envisages that a request to remit the penalty can be made. In my view one would only do that where no objection is made to the assessment itself.
Because the imposition of the understatement penalties depends on the ‘behaviour’ (see the table in section 223), the grounds of the objection, or request, must deal with the behaviour. This of course assumes that “the ‘understatement’ didn’t result from a bona fide inadvertent error”.
It is not something that is to dealt with at the SARS branch. If the taxpayer disputes the penalty (or tax debt), a suspension of payment request must be made.