How to successfully navigate tax disputes

Tax specialist and founder Nico Theron explains how Unicus Tax aims to make tax matters easier.

As a tax specialist and expert on tax objections and appeals, Nico Theron is familiar with the challenges companies grapple the most with. He found that the dearth of clear, actionable directions in the event of a dispute with SARS left many companies unclear about the avenues available to them to resolve and clear up differences. In response, he penned Practical Guide to Handling Tax Disputes, a book designed to reduce the confusion and friction that comes with tax disputes.

Knowing your rights
According to Nico, there is a set of rules that govern the processes of tax disputes. These rules are unique, but because there is no single set of commentary that places all these rules in context, there is often confusion when it’s time to act on them.

“I wrote the book to establish a common context and whole view so that readers can see how rules apply, and to help them make sense of the system. It sets out to give clarity on exactly what the rules say, what is permissible, what isn’t.”

Many of the gripes companies experience are rooted in the application of the law and under tax legislation, taxpayers who feel aggrieved by a decision taken by SARS have to go through an internal dispute resolution process that may take years.

Which steps to take
Nico says it’s important for taxpayers to know the options they have to challenge an assessment or decision by SARS: “Tax rules and legislation allow for various remedies, but they are dispersed, so I condensed them all, highlighted remedies and outlined how to seek them in the event of a dispute,” he explains. The book collates the remedies available and shows the taxpayer how to seek them.

Nico points out that the process of resolving a dispute can be prolonged because even though remedies are available, or the taxpayer proposes a solution, SARS doesn’t always agree. The book therefore takes a further step and offers practical solutions on what to do if SARS disagrees with you or simply doesn’t respond to your proposal.

Usually, the most immediate and pressing issue companies face is the ‘pay now, argue later’ rule, which stipulates that a taxpayer is obliged to pay the tax reflected in an assessment as being due even if he disputes the correctness of the assessment.

“It not only has financial implications, but it also affects a company’s clearance status and can hinder its ability to generate revenue because it is deemed non-compliant while in the resolution process,” says Nico. In the book, the objection and appeal process is outlined, which is key to companies managing their business during the process of resolving a dispute.

Making sticking to the rules a two-way street
Few taxpayers seem to question the merits of an assessment but also whether the assessment was lawfully issued in a procedurally fair manner in the first place.

Nico points out that if SARS doesn’t apply rules correctly or timeously, it doesn’t mean you are defenceless. For instance, there are pre-assessment obligations that must be followed if SARS is auditing you and there is recourse if it doesn’t follow that process.

He shares that because the processes of resolution can be so lengthy and expensive, if SARS doesn’t comply with its own rules, or misses deadlines to respond to you, it’s often at the expense and inconvenience of the taxpayer. Many don’t know that they can use SARS’ failure to comply with rules to their favour when exercising their rights.

“The Tax Ombud recently released a report into SARS dispute resolution, with the revenue collector not responding to you on time, and what is your recourse, and those remedies are very powerful. The book explains what you can do if SARS doesn’t meet deadlines or adhere to its own rules,” says Nico.

For instance, Prescription is a rule that says after a certain amount of time or after a certain event, SARS can’t change an assessment anymore. “The book outlines details around the rule, when SARS can use it. The last thing we want is for SARS to raise an assessment from many years ago, so the book also offers information on that and what you can do about it if they don’t raise it in accordance with the law.”

Preparing for the future
Nico says SARS is currently trying to address existing gaps, which includes enforcement, as evidenced by the recent R3 billion investments in upgrading its technology and massive recruitment effort it recently undertook. “SARS is clearly bolstering its enforcement, which is likely to lead to more disputes. SARS is chasing targets, and some assessments that arise may prove to be baseless, so taxpayers need to know how to respond and challenge them where necessary.”

He says having dealt with tax disputes over many years, business leaders and tax professionals will benefit from having a book that helps them to digest relevant information more easily. “SARS has a guide, but it is very high level and doesn’t add much value from a day-to-day management view. I thought it was important to condense and explain in simple terms, the remedies and what the rules say.”

Unicus Tax will be showing its support for finance professionals at the live Finance Indaba on 7 October.