With the November tax deadline looming, it is almost needless to warn taxpayers of the torrid tax season awaiting them, writes Jean du Toit, attorney at Tax Consulting SA.
It is by no means a state secret that there is an increasing exigence for SARS to collect taxes and the grim picture painted by the mid-term budget is an omen of the coming assault.
As things stand, a symptom of the current tax environment is an unprecedented surge in audits, which, on the account of our clients have become more arduous, as SARS seeks to make up the shortfall by using the powers afforded to it under the Tax Administration Act more aggressively.
At the risk of leaving taxpayers utterly despondent, the storm clouds gathering in the form a Commission of Inquiry must also be pointed out. Whilst we can only speculate as to what the true motive behind the inquiry is, we can safely assume that this will intensify the already crushing pressure on SARS to collect taxes.
This latest development in the SARS chronicles is the canary in the coal mine for taxpayers, to brace for the assertive manner in which SARS will extract every morsel of tax money it possibly can in the coming months.
One can appreciate that South African taxpayers might feel that they have been dealt a rotten hand, especially since there are allegations of particular citizens of our country not paying their fair share. Although taxpayers cannot legally escape the proverbial mine in this instance, it cannot be expected of them to simply brave the storm and have SARS take the lead.
Taxpayers would do well to understand that the best way to negotiate the dreaded process of an audit, and to prevent the possible devastation of any assessments issued subsequently, is to avail themselves to the rights afforded to them by the law.
SARS has wide, but not unshackled powers and the moment SARS issues an assessment against a taxpayer, it is bound by the rules promulgated under the Tax Administration Act.
Taxpayers must be alive to the fact that the process following an assessment is strictly regulated by these rules, which affords them multiple mechanisms to ensure that the dispute process is conducted fairly.
The rules serve as the equalising factor in confrontations with SARS and can be an invaluable tool, if used appropriately. However, if not heeded properly, these rules are a double-edged sword that can be a taxpayer’s downfall.
Know the law
One’s acquaintance with tax law and the dispute resolution process, or lack thereof, has a direct bearing on the course of proceedings and the ultimate outcome of a tax dispute. Ignorance of the law and the Rules can result in calamity for the taxpayer, regardless of the fact that he/she had a valid claim.
We advise taxpayers to not endeavor going down the tax dispute resolution road alone, but rather call in the help of an attorney who is knowledgeable on tax law and who knows how to traverse the obstacles of tax disputes.
“Tax dispute resolution is just that, a legal process like any other. In saying that, it must be remembered that the substance of these disputes is tax law, which is well known for its fluidity and intricacies,” he says, while adding that tax dispute resolution is the territory of astute tax attorneys who task themselves with understanding the nuances of tax law and know which strategy to pursue to capatilise on the remedies afforded by the Rules to ensure favourable outcomes.
Taxpayers who decide to face the coming onslaught from SARS without the requisite proficiency in tax law and tax dispute resolution do so at their own peril.