Is It Really a Verification? Challenging Process Creep in SARS Engagements

---

Is It Really a Verification? Challenging Process Creep in SARS Engagements

• 30 August 2026
• Tax Administration
• Theo Burrows

Tax Practitioners are not agents of SARS. They, I argue, are representatives of taxpayers. Their role is to assist clients in lawfully optimising their tax positions and to protect taxpayer rights when SARS exercises its powers under the Tax Administration Act. In recent years, many practitioners have expressed concern that the distinction between verifications, audits, and investigations has become blurred in practice. This has important implications because each process carries different legal consequences, procedural protections, and obligations for both SARS and the taxpayer.

Accordingly, Tax Practitioners should remain vigilant in identifying the true nature of SARS's engagement with a taxpayer and ensure that the correct process is being followed.

Understanding the Distinction

· Verification

A verification is a limited check of information declared in a tax return, normally involving a request for supporting documents relating to a specific item.

The purpose of a verification is generally to confirm the correctness of information already submitted by the taxpayer.

· Audit

An audit is a broader examination of a taxpayer's tax affairs to test:

·        The accuracy of tax returns.

·        The legal basis for tax positions adopted.

·        Compliance with applicable tax legislation.

·        The nature and deductibility of expenditure.

·        The source and application of funds.

SARS must generally issue an audit commencement notice, provide progress information during the audit process, and issue an audit outcome document where material adjustments are proposed.

· Investigation

An investigation is generally a more fact-finding process directed at suspected wrongdoing, non-compliance, or irregularities.

An investigation may involve:

• Examining records and transactions.
• Obtaining information from third parties.
• Tracing funds and commercial activities.
• Interviewing relevant persons.

Where an investigation develops into a criminal investigation, its purpose extends beyond correcting a tax assessment and may include establishing whether a tax offence has been committed.

Why the Distinction Matters

The classification of a SARS process is not merely administrative.

The process determines:

• The taxpayer's procedural rights.
• The obligations imposed on SARS.
• The scope of information that may lawfully be requested.
• The notices that must be issued.
• The remedies available to the taxpayer.

Where a verification evolves into a broader inquiry into the taxpayer's affairs, practitioners should consider whether the process has effectively become an audit. Likewise, where inquiries focus on suspected misconduct rather than return verification, the process may exhibit characteristics of an investigation.

Common Procedural Violations and Irregularities

Tax Practitioners should remain alert to procedural defects that may prejudice taxpayer rights, including:

• Conducting what is effectively an audit while labelling it as a verification.
• Expanding a verification beyond specific items contained in a return.
• Requesting information that appears unrelated to the stated purpose of the inquiry.
• Failing to issue an audit commencement notice where the nature of the inquiry indicates that an audit is being conducted.
• Failing to provide adequate reasons for assessments, adjustments, penalties, or adverse decisions.
• Ignoring or inadequately considering explanations and supporting evidence submitted by taxpayers.
• Repeatedly requesting documents already provided.
• Failing to provide audit findings or outcome reports that allow taxpayers a meaningful opportunity to respond.
• Unreasonable delays in finalising verifications, audits, objections, appeals, or refunds.
• Applying inconsistent interpretations without providing adequate explanations.

How Tax Practitioners Protect Taxpayer Rights

Tax Practitioners protect taxpayer rights by ensuring that SARS exercises its powers lawfully, reasonably, and procedurally fairly.

This includes:

• Identifying when a process has moved beyond a verification and become an audit or investigation.
• Ensuring that SARS follows the procedures applicable to the process being conducted.
• Confirming that information requests are relevant and proportionate.
• Protecting taxpayers against fishing expeditions.
• Requiring SARS to provide notices, reasons, and outcomes where required by law.
• Challenging unlawful assessments, penalties, or collection actions.
• Safeguarding taxpayers' rights under the Tax Administration Act and the Constitution.

The practitioner's role is not to obstruct SARS but to ensure that both SARS and taxpayers are held to the same standard of legality, accountability, and procedural fairness.

Challenging Procedural Errors

Where procedural irregularities arise, Tax Practitioners should take proactive steps to protect their clients.

These may include:

• Requesting clarity on whether SARS is conducting a verification, audit, or investigation.
• Challenging requests for information that fall outside the lawful scope of the process.
• Recording procedural objections in writing.
• Demanding adequate reasons for decisions and assessments.
• Requiring SARS to issue the notices and communications contemplated by law.
• Responding promptly to procedural defects before assessments are issued.
• Raising procedural irregularities as grounds of objection or appeal where prejudice has occurred.
• Applying for suspension of payment where disputed tax is subjected to collection action.
• Utilising SARS's internal complaint mechanisms where appropriate.
• Referring qualifying matters to the Office of the Tax Ombud.
• Seeking judicial review where administrative action is unlawful, unreasonable, or procedurally unfair.

Conclusion

A Tax Practitioners should not focus solely on whether SARS's tax conclusion is correct. Equal consideration must be given to whether SARS has followed the correct process.

Procedural fairness is not a technicality. It is a fundamental safeguard against arbitrary administrative action and forms an essential part of the rule of law in tax administration. Ensuring procedural compliance protects not only individual taxpayers but also the integrity and legitimacy of the tax system itself.

0 COMMENTS

LEAVE A COMMENT