A client overpaid provisional tax for the year end 2017/18 and is due a much needed refund of 4 million rand. SARS on 5 October 2018 started a "full audit" on the client. Up to this stage we have not had any information or queries on what they require and
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
The fact that the reason for the refund was the overpayment of provisional tax is irrelevant as we accept that the assessment was issued in respect of the year in question.
The position is that SARS, under section 190(2) of the Tax Administration Act, is entitled to withhold a refund. We quote from the section:
“SARS need not authorise a refund as referred to in subsection (1) until such time that a verification, inspection or audit of the refund in accordance with Chapter 5 has been finalised.”
But, as Judge Sutherland explained, “… the power to refuse to pay a refund is limited to an examination of the contemplated refund itself … an examination of income tax affairs of the taxpayer cannot be relevant as a brake on the invocation of section 190(1) entitling the taxpayer to the refunds.”
The SARS service charter states that SARS should “conclude an audit within 90 business days from the date all required supporting documents are received.” This may well not refer to the audit of a refund.
There is nothing preventing you from following this up with SARS – you could lay a complaint if you believe the process is taking longer than it should.