Getting Your Ducks In a Row (Part 3)
02 November 2006
Posted by: TaxFind™
Getting Your Ducks In a Row (Part 3)
Tax Risk Management, in the context of Constitutional rights has been discussed in the previous articles, pointing out the facilities available to taxpayers.It reminds me of an old joke–apologies upfront to anyone who may take of fence, but it illustrates an important point – an elderly gentleman goes down to the lobby of a 5 star hotel to settle his bill.He is shocked at the amount and questions it.The receptionist explains that the rate is as high as it is because the 5 star hotel offers various standard and luxury facilities, including 24 hour room service,24 hour Jacuzzi, 24 hour gym, 24 hour swimming pool and so on. To which the elderly gentleman complains "but I didn’t use any of these facilities”. The receptionist clearly goes on to explain "That doesn’t matter, they were available to you”. At this the elderly gentleman takes out 50% of the amount to pay, saying "I am applying a set off. This is for my girlfriend, who was with me, with all her facilities available to you andyour establishment. The fact that you didn’t use them – according to you – is irrelevant.They remained available, nevertheless!”
This brings me to the relevance of the joke.What an amazing Constitution we have –with all its facilities. But do we use them?Worse still – when we go to skilled lawyers seeking to apply them – we are cautioned,and mostly advised not to chance it! So what’s the use? Here is this fantastic piece of legislation with all its facilities to protectus, being abrogated by disuse!
It so often happens, after advising clients to stand up for their rights, they go and seethe Constitutional lawyer clique, simply to be told – don’t bother with fighting the procedural messes that SARS makes. They can always remedy it, and will get their way in the end. Rather focus on the merits of the case, and avail yourself of the very fair procedures in the tax acts.
Mmm … let me see. Latter part of the advice,focusing on the merits is sound, and that goes without saying much more. But the comment on not fighting the procedural messes – in my view is patently flawed. If taxpayers continue to blindly accept some of the bullying tactics forced upon them by SARS, how do we ever temper the current floodgate onslaught in certain quarters?What is more the Constitution, PAJA, the common law currently developing and SARS practice contains MANY safe opportunities to get SARS to do it right. Furthermore,when SARS are confronted with their procedural mistakes, at the right level, they tend to pay attention, they, YES, then remedy the defect, but the result is usually an opportunity to narrow down the issues in dispute.
The advantage is that assessments finally raised are reduced to what is really in dispute. The "fair” tax procedures can then be followed in addressing the real merits of the case.
Don’t forget the political conundrum that faces our nation. Government is attempting to chase the ‘buck’ resident in the affluent taxpayers, time and time again, to fund what is an expense that has no bottom – 25% of the population on social grants, addressing the evils of the past, and so on and so on,through funding beetroot farms (tongue in cheek).
This means, the higher assessment(regardless of what is ultimately collected),the better the greater revenue collection system looks and the greater the squeeze on those affluent taxpayers.A clever strategy that requires using all the facilities available to those taxpayers.
PS Remember SARS is using some of the best lawyers to fight its cause including downplaying the relevance of the Constitution.Don’t be fooled by this.Lawyers (like me) are hired hands who put the best case forward for their paying client.50% of all cases have a winner in Court.50% of all cases have a loser in Court.The trick is to address issues (incl. procedural ones) very early in the process, so as to narrow down anything that may go to court.Rule of thumb, however, stay out of court!It’s too risky. So the next time you get advice from a lawyer speaking in absolutes if you do this, you wont win, if you do that you will lose – Remember you are not trying to go to court. You are appealing to the common-sense of a SARS official that he may be acting as a bully, in an attempt to avert going to court at all, over something not worth the gamble (courts tend to lean over backwards to legitimize the ‘good cause’ our Government fights –according to leading counsel).
On a final, final note maybe business should realize it’s not their duty to address the crime problem in SA.It’s the duty of Government,with the billions of taxes they are recovering.
Business should rather take a stand on business issues that will help drive the growth in the economy from a business perspective, where business can exert direct influence. One of the major issues is a fair tax system, saying as it is most businesses biggest creditor. Fairness requires careful balance, a balance of the interests of Government and the interest of business,resting on the pivot know as SARS, the collector. SARS should be sensitive to both in the execution of their duties – as they have promised to do, and as guaranteed by the Constitution – with all its facilities. What discount will you otherwise claim from Government on the taxes you pay? Oops– I forgot – if you do anything like that you are a criminal. Well, if Government and SARS don’t play their role correctly, what does that make them? Don’t ask counsel –they’ll probably tell you (in absolutes) yourcase isn’t strong enough to have us win in court.
Source: By Daniel Erasmus (TaxTalk)