Negotiating your Suspension of Payment

Negotiating your Suspension of Payment

• 28 October 2024
• Accounting
• Adv Christel van Wyk

The pay-now-argue later principle is firmly entrenched in our tax law and embodied in section 164(1) of the Tax Administration Act, 28 of 2011 (the Act) which requires tax debt to be paid unless formally suspended by SARS in terms of the prescribed process in the Act. A taxpayer may ask for suspension of the total tax debt amount or a part thereof.

The manner in which the Commissioner exercises this power to grant suspension or not is nevertheless of extreme importance. More particularly, it would need to be clear that the decision whether to grant a suspension or partial suspension was taken only after due consideration of the pertinent facts, factors and surrounding circumstances of the instance. 

Section 164(3) of the Act sets out a non-exhaustive list of factors to which a senior SARS official must have regard in exercising the power to suspend payment of a disputed amount of tax.

In this way, section 164(3) sets out that SARS, in taking a decision on the suspension of payment request, must have regard to relevant factors, including the following:

• The compliance history of the taxpayer.
• The amount of tax involved.
• The risk of dissipation of assets by the taxpayer during the period of suspension.
• Whether the taxpayer is able to provide adequate security for the payment of the amount involved and whether it is in the interest of SARS to accept security.
• Whether the payment of the amount would result in irreparable hardship for the taxpayer;
• Whether sequestration or liquidation proceedings are imminent; and
• Whether fraud is involved in the origin of the dispute

Whilst not formally included in the list of factors, SARS also sometimes consider whether the taxpayer has failed to furnish any information requested by the Commissioner in terms of the Act, and how co-operative the taxpayer is with SARS. Since the above-mentioned list is not an exhaustive list, SARS may consider any other factors that in their view are relevant to the suspension request.

Not all these factors are, however, necessarily relevant in each instance and there is nothing in the provisions of section 164 of the Act that indicates that SARS is required to adopt a ‘tick-the-box’ approach whereby all the factors considered will have a relevant outcome in each instance or that these factors should have an equal weighting in SARs decision-making process. 

Instead of simply submitting the request for a suspension form to SARS on efiling, it is always a good idea to submit a detailed supporting letter which sets out the pertinent facts, factors and circumstances that SARS should consider having due regard to the taxpayer’s specific circumstances. SARS as an administrator is required to consider all relevant facts and circumstances before them.

The taxpayer’s input with regards to any of the factors serves to direct SARS as to the relevance and relative weighting of the various factors to consider in each instance and to ensure that SARS duly applies its mind to the facts and circumstances placed before it. If the taxpayer does not believe a factor is relevant, it is incumbent on the taxpayer to convince SARS of this.

Bearing in mind that the decision by SARS not to grant suspension of payment is not a decision that is subject to objection and appeal and it is therefore all the more important to ensure that SARS takes an informed decision on the request for suspension of payment and that SARS duly applies its mind to the relevant facts and circumstances placed before it.

Join Adv Christel van Wyk on 11 November for a webinar on "Negotiating Tax Debt and Payment Arrangements with SARS"

• Click here to view the short introduction video.
• Click here to read more and book your seat.

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