I was approached by a client with a lengthy unresolved matter. In 2008 A VAT Vendor,JHB , claimed a refund of R24 000 in their first VAT Return. A SARS auditor went to the incorrect office and reversed the refund, adding 200 % penalties and also Deregiste
Important:
This answer is based on tax law for the year ending 28 February 2009.
Answer:
Section 99(2)(d), in respect of an assessment referred to in section 93(1)(d), requires that SARS must become aware of the error referred to in that subsection before expiry of the period for the assessment under section 99(1). Because this is an assessment issued by SARS, a VAT217, we submit that the period is three years after the date of assessment of an original assessment by SARS.
The only option then is section 93(1)(e) of the Tax Administration Act. It reads as follows:
SARS may make a reduced assessment if a senior SARS official is satisfied that an assessment was based on—
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the failure to submit a return or submission of an incorrect return by a third party under section 26 or by an employer under a tax Act;
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a processing error by SARS; or
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a return fraudulently submitted by a person not authorised by the taxpayer.
The term is not defined, but we are not sure if this is in fact a processing error by SARS.
The fact that SARS, in issuing the additional assessment, may not have treated the taxpayer administratively unfairly, should have been dealt with by way of a review application. We don’t believe that the taxpayer can request for the assessment to be withdrawn – see section 98 of the Act.