SARS withdrew R 5 mil from our clients bank account for failure to upload supporting documents for VAT refunds claimed. The client is now not able to function operationally because these funds were required for payments etc which they cannot meet. Also no
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The relevant law is found in the Tax Administration Act.
We accept, for purposes of the guidance that follows, that no previous request to suspend the debt due was made and there is no instalment agreement.
The law enables SARS to collect the tax debt even if it is under dispute and the vendor would only be able to prevent that if a suspension of debt request was made. In terms of the Tax Administration Act an objection doesn’t suspend the obligation to make payment – the vendor must request suspension. See section 164.
Section 179(1) allows a senior SARS official to authorise the issue of a notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, requiring the person to pay the money to SARS in satisfaction of the taxpayer’s outstanding tax debt. This would include the taxpayer’s bank.
SARS may only issue this notice after delivery to the tax debtor of a final demand for payment which must be delivered at the latest 10 business days before the issue of the notice, which demand must set out the recovery steps that SARS may take if the tax debt is not paid and the available debt relief mechanisms under this Act, including, in respect of recovery steps that may be taken under this section—
(a) if the tax debtor is a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on the basic living expenses of the tax debtor and his or her dependants; and
(b) if the tax debtor is not a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on serious financial hardship.
Section 172 deals with the application for civil judgment for recovery of tax. It reads as follows:
(1) If a person has an outstanding tax debt, SARS may, after giving the person at least 10 business days’ notice, file with the clerk or registrar of a competent court a certified statement setting out the amount of tax payable and certified by SARS as correct.
(2) SARS may file the statement irrespective of whether or not the tax debt is subject to an objection or appeal under Chapter 9, unless the period referred to in section 164(6) has not expired or the obligation to pay the tax debt has been suspended under section 164.
(3) SARS is not required to give the taxpayer prior notice under subsection (1) if SARS is satisfied that giving notice would prejudice the collection of the tax.
As the debt arose after assessment by SARS, the VAT217, an objection must be lodged to correct the assessment.
If the documents were not available at the time the VAT201 was submitted, the input tax can be deducted in a subsequent return - VAT201.
We don’t think that it would be possible to take the SARS action on review.