Managing Expectations When Interacting with SARS

Managing Expectations When Interacting with SARS

• 22 April 2025
• Tax Administration
• Adv Christel van Wyk

Interacting with the South African Revenue Service (SARS) can be daunting, given the numerous processes that must be followed, the various communication channels available, and the strict timelines imposed either by law or directly by SARS.

A good starting point for taxpayers is to familiarize themselves with their rights and obligations, SARS’s powers, and the service level commitments outlined in the SARS Service Charter.

On the SARS website, several taxpayer rights and obligations are listed, all of which tie into SARS’s strategic objectives. These include:

• Clarity and certainty—to be informed about obligations to SARS;
• Excellent service, regardless of the method of engagement;
• The right to be heard, to complain, and to lodge disputes that are resolved timeously;
• Confidential and fair treatment by SARS, without fear, favour, or prejudice.

However, these rights do not represent the full legal picture. Taxpayers also enjoy fundamental rights under the Constitution, notably:

• Section 33: The right to just administrative action that is lawful, reasonable, and procedurally fair, including a right to written reasons when adversely affected.
• Section 34: The right of access to courts—to have disputes resolved in a fair public hearing before a court or other impartial forum.

To give effect to these rights, national legislation mandates mechanisms for reviewing administrative decisions and obliges the state to promote efficient and fair administration.

Dispute Resolution: Legal Pathways and Constitutional Alignment

Tax disputes are typically resolved through the tax court, with further escalation possible to the High Court, Supreme Court of Appeal, and even the Constitutional Court, where necessary. Informal alternative dispute resolution (ADR) also provides a practical and cost-effective option. These avenues reflect the constitutional guarantees enshrined in sections 33 and 34.

However, the practical implementation of these processes can be fraught with challenges, as demonstrated in the recent Western Cape Tax Court case: Dr X Inc v CSARS (Case No.: 52/2023). The case centred on the validity of a Notice of Invalid Objection issued by SARS.

One of the key legal questions was whether SARS’s invalidation of an objection—rather than deciding to allow or disallow it—unjustly deprived the taxpayer of access to the courts. The tax court was not persuaded by this argument, finding it speculative. It held that a taxpayer could still approach the court under Rule 52(2)(b) of the dispute resolution rules to seek a declaration that the objection is valid.

The court concluded that section 34 does not confer an unrestricted right of appeal in every objection case. SARS must first determine whether the objection meets the formal requirements. If it does not, the precondition for tax court jurisdiction remains unmet. The court emphasized that this is a consequence of the statutory framework and not an unlawful restriction of constitutional rights.

SARS Powers and the Challenge of Procedural Expectations

It remains to be seen whether this matter will proceed to a higher court and whether the tax court’s interpretation of SARS’s powers might be viewed as overly broad—specifically, the power to invalidate objections for procedural deficiencies.

SARS is bound by legislative timeframes: for example, it must either invalidate an objection or request further documents within 30 business days, and it must take a decision on an objection within 60 days of receipt. In Dr X Inc, SARS did issue its invalidation notice within the timeframe, but the broader question arises: does SARS have unfettered discretion to invalidate an objection based on dissatisfaction with the form or format of the supporting documents?

This is a prime example of where managing expectations in interactions with SARS becomes particularly difficult.

Strategic Engagement and Practical Advice

Successful interaction with SARS hinges not only on cooperation—but also on being perceived as cooperative. If SARS requests supporting documents in a specific format and a taxpayer cannot comply, it is prudent to provide clear, plausible reasons. If SARS rejects these and issues a decision that materially affects the taxpayer, that decision may be challenged through proper legal channels.

Where an objection is invalidated for formal reasons, simply resubmitting it with the same documents is unlikely to succeed. In Dr X Inc, the taxpayer opted to seek validation of the objection through the tax court—but was unsuccessful. In such cases, consideration may be given to appealing the court's decision, or potentially pursuing judicial review to challenge the fairness of SARS’s administrative actions.

0 COMMENTS

LEAVE A COMMENT