Tax Ombud saves taxpayers millions of rands

But Ngoepe wants even more independence for his office

Despite numerous challenges and teething problems, the Office of the Tax Ombud (OTO) in Pretoria has achieved a few milestones since it was launched exactly five years ago with retired Judge Bernard Ngoepe at the helm.

On Tuesday this week, Ngoepe shared the journey of the office with at least 100 delegates during the launch of the Tax Ombud Annual Report in Menlyn, Pretoria. The launch of the report, attended by among others acting South African Revenue Service (Sars) commissioner Mark Kingon and public protector Busisiwe Mkhwebane, coincided with the fifth anniversary of the establishment of the office.

“It has been an eventful period, with more ups than downs,” Ngoepe said, adding that in the past financial year close to R450-million in tax refunds was paid to the top 10 taxpayers, thanks to the intervention of the OTO.

He added that the top 10 complaints with the highest amounts resulted in R446-million in VAT and CIT (corporate income tax) refunds paid out to taxpayers, after they lodged complaints with the OTO against Sars. The highest refund paid was a VAT refund of R158 286 298, followed by R90 973 572.

Ngoepe, frank and analytical in his engagement, said that the organisation has experienced a significant increase in the number of people who contacted it, from 670 in the 2013/2014 financial year, to over 17 000 in the 2017/2018 financial year.

“We are pleased with how we have been able to help promote fairness in the country’s tax administration system and we look forward to working with other stakeholders, not to just promote and protect the rights of taxpayers, but also to promote tax compliance,” said Ngoepe.

“This office has helped resolve thousands of taxpayers’ complaints against the revenue collector in the past five years, but there is still much that needs to be done. We have already brought about positive changes in the Tax Administration Act, which have given us powers to investigate systemic issues and have more independence from Sars, among others.

“We continue to travel the length and breadth of the country informing taxpayers about our services. We are also working closely with our government through the Government Technical Advisory Centre, which is assisting in developing a business case for a costeffective and independent organisational model.”

Five years ago, the office had only five employees, including Ngoepe and the chief executive, advocate Eric Mkhawane. According to one staff employee, the office had no furniture, no stationery, and not even a website when it started. Today, the office boasts a staff complement of 44 employees and a state-of-the-art office in Pretoria.

While this is impressive, Ngoepe said he hopes the OTO will grow and have more staff in order to have a national footprint and be able to assist taxpayers across all nine provinces. “There was nothing when we started this office,” he said.

Legally, the Office of the Tax Ombud handles various issues experienced by taxpayers on a daily basis, such as delays in payments of refunds and victims of identity theft being held liable for tax debts.

The office also deals with inconsistencies by Sars in giving taxpayers timelines for finalisation of audits, and the non-adherence by Sars to dispute resolution turnaround time.

“Just over five years ago, taxpayers within South Africa’s borders had very little recourse, if any, when it came to having their tax complaints against the often-feared SA Revenue Service heard and resolved fairly. They had two choices: complain to Sars about Sars, or take the legal route. The latter was almost an impossible alternative for the majority of taxpayers, who cannot afford the exorbitant legal fees required when trying to legally challenge the might of the revenue collector,” said Ngoepe.

“The Office of the Tax Ombud has placed fairness as its backbone — it’s the alpha and the omega of everything it does. Our stance has always been that we are neither for Sars nor for taxpayers. We look at facts and make independent and impartial decisions.”

Kingon said during the discussion that Sars respected the OTO and its role and functions: “We respect each other’s roles. It has been a rocky relationship but a lot has improved, and we are looking to the next five years.”

During the discussion of the Annual Report, Ngoepe pleaded for greater powers for the office. According to Mkhawane, the organisation has been grappling with a perceived lack of independence from Sars, as well as having insufficient power.

“Many people, especially during the first two years of existence, described the organisation as being toothless and just an extension of Sars. Justified or not, such perceptions and utterances were the results of the Tax Administration Act which, to a large extent, forced the OTO to rely on the revenue collector for support services, including human resources, information technology and procurement, as well as for its budget, which was under the control of Sars,” said Mkhawane.

“For instance, in terms of section 15 (1) of the Act, the tax ombud could not employ his own staff directly; he could only do so in consultation with the Commissioner of Sars, and the functions of the office would be paid out of the funds of Sars. These provisions were anomalous, given the fact that ombud’s mandate is to investigate complaints against Sars itself.”

Mkhawane said the office has made several proposals to national treasury and made amendments to the Act, which removed the requirement to consult with the Sars commissioner when the tax ombud appoints his staff. In addition, the expenditure connected with the functions of the office is now paid in accordance with the budget approved by the minister of finance.

“It is important to remember that in the past five years, our organisation has helped bring fairness to the tax administration system and promoted the respecting of taxpayers’ rights by Sars and stakeholders. It also saved many individuals and businesses millions of rands that could have been lost had the OTO not intervened on their behalf. The fact that on average about 80% of complaints we dealt with were resolved in favour of taxpayers, is a further indication of the need and important role that the Office of the Tax Ombud plays in the tax administration system. It has brought fairness to tax collection,” said Mkhawane.

Ngoepe said apart from the issue of independence, which is crucial and fundamental, one of his ambitions is to have provincial footprints.

“Currently, we only have one office, in Pretoria, for the entire country. We need to be accessible, and that means going out to various provinces so that people can reach us. We hope to achieve this in due course,” he said.

“Another priority is to continue attracting and retaining committed and skilled staff. By its very nature, this is a specialised office. It is about tax, about going toe-to-toe with Sars staff and querying whether what they have done is correct or wrong. This means the OTO must have experts in tax; otherwise we will not be able to raise queries with Sars. It is essential that we continue to maintain this level of expertise.”

“On average about 80% of complaints that the Office of the Tax Ombud dealt with were resolved in favour of taxpayers”