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The trials of being ratted on to SARS

Monday, 03 September 2012   (0 Comments)
Posted by: SAIT Technical
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By Prof Matthew Lester (Tax Talk)

WHILE serving my country as a tax inspector, I was placed under the supervision of a Mr Knersus (also known as Gnasher). His reputation did not emanate from excellence in tax, but from his false teeth. He was a kindly tax inspector.

Knersus had no time for "pimping”, as he called it. That was when informants reported suspicious activities to SARS. He reckoned informants gave exaggerated accounts and, more often than not, were in on the deal and just did not get a big enough slice of the action.

Knersus would turn in his grave if he knew there was now a SARS hotline to report suspicious activity and that pimping is now morally the right thing to do.

But how does the taxpayer react if SARS suddenly knocks on the door with exaggerated accusations by a friend-turned-foe or business competitor?

The Tax Administration Act (TAA) of 2011 is now law, and we are going to see some major changes as SARS implements new provisions in months to come.

An objective of the TAA is to offer the compliant taxpayer greater protection, while making it easier for SARS to pursue dishonest taxpayers. The act has clearly recognised other acts that have evolved from the constitution.

The TAA now contains provisions to bring taxpayers' rights in line with the Promotion of Access to Information Act of 2000. Taxpayers now have right of access to their SARS files, and this can be applied to obtain the origin of accusations made against them. SARS investigations and proceedings must be placed on hold until such information is furnished. But will this help the taxpayer or just aggravate relations with SARS?

I have always promoted reasonable cooperation with SARS. Delaying tactics don't work, especially if the taxpayer is on the wrong side of the law. But that is my personal experience; more than a few respected tax experts disagree with me.

So, if the taxpayer is compliant, and outrageous accusations with suspicious origins arise, then using the access-to-information provisions of the TAA may help. But I wouldn't try it without obtaining professional help from a specialist in tax administration, administrative justice and constitutional law. And that could be expensive.

Remember, the access-to-information provisions will seldom, by themselves, stop a SARS investigation dead in its tracks. They merely provide a procedure that has to be observed if SARS is acting on a tip-off.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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