Pay now argue later
06 February 2013
Posted by: Erich Bell
The new Tax Administration Act No 28 of 2011 (TAA) was promulgated with effect from 1 October 2012 and, while expected to have extended taxpayer rights, it also reaffirmed and extended the powers of the South African Revenue Services (SARS).
Know your rights
The objective of SARS is to ensure the efficient and effective collection of tax revenue. The TAA seeks to balance these powers and duties of SARS with the rights and obligations of taxpayers. Tax evaders and non-compliant taxpayers can expect stricter enforcement measures as SARS is tightening the grip on non-compliance.
SARS has always believed in the principle of "PAY NOW, ARGUE LATER”. This principle means that once returns are filed and assessments raised, taxpayers must pay the taxes arising from it. One may only object or appeal after the tax has been paid. The TAA reinforces the principle and SARS is set to follow the process as laid down. Will this not be deemed unfair to the taxpayer? There are a number of reasons why this principle is enforced by SARS.
First and foremost, it will secure revenue payable to SARS. This is driven by the fear that the assets of a taxpayer are reduced during the tax period which may jeopardise the collection of revenue. In the instance of a possible liquidation or sequestration, SARS may require the taxpayer to provide security to ensure the collection of the tax in question. Another deciding factor would be if SARS expects that elements of fraud or intentional tax evasion are present in the taxpayer’s assessment.
The compliance history of the taxpayer will also be revised in these instances. It will always be beneficial for the taxpayer to have a good clean record. The applications received from applicants with a history of voluntary disclosure relief and unsuccessful disputes will be focused on in more detail. Taxpayers, who are unsatisfied with the assessment raised by SARS, must not only file a formal request to suspend the collection of taxes raised, but also enter into a dispute resolution process.
It is of the utmost importance that SARS must accept the request for the possible postponement of payment. Should it be decided that the payment may not be suspended; SARS may not recover the tax during the following 10 business days. This will allow the taxpayer to consider its further rights. The taxpayer must continuously follow up on the application’s progress until the date the suspension has been confirmed or declined by SARS. The filing of a dispute will not guarantee the suspension of any taxes that needs to be paid.
Therefore, taxpayers have two options to consider when issued with an assessment. If an assessment is going to be accepted, the taxpayer will become liable to make the necessary payments. If the assessment is disputed by the taxpayer, it must be filed timely and according to the dispute resolution rules.
It is therefore very important that you first consult with a tax practitioner before deciding to dispute an assessment. The practitioner will ensure that the right procedures are followed and that any further requirements are adhered to.
Source: Dirk Kotze