Good tidings for those Sars owes

Tax ombud finds taxman has in some instances been unduly delaying payments – but there’s R20 billion available for refunds.

Tax ombud found Sars had in some instances been unduly delaying payment.

The Office of the Tax Ombudsman’s investigation into the delay of refunds from the South African Revenue Service (Sars) has borne fruit. Finance Minister Tito Mboweni announced in his Medium-Term Budget Policy Statement that R20 billion in value added tax refunds would be paid to taxpayers.

The ombudsman found in a scathing report that Sars had, in some instances, been unduly delaying valid refunds. However, the number of complaints about non-payment of refunds still topped the list of complaints received by the ombudsman. It has received over 800 complaints, almost 35% of all complaints.

Dispute resolution

Another issue was the length of time involved in resolving disputes with Sars. The ombudsman recently received approval from the finance minister to investigate the reasons for Sars’ non-compliance with the timeframes in the Tax Administration Act. In the 2017/18 Tax Ombudsman’s annual report, complaints about non-compliance with dispute resolution time-frames ranked second highest.

Taxpayers who have been battling with Sars about delays in the dispute process can now approach the ombudsman to act on their behalf.

Law firm Webber Wentzel’s Joon Chong said the dispute resolution process has become quite unfair, mainly because of the time and money it took to finalise a dispute. She said taxpayers who wanted to dispute assessments had to object and file it within 30 days of receiving the assessment, or apply for a 30-day extension if they have reasonable grounds.

Once Sars had received the objection, it has 60 days to notify the taxpayer if it would be allowed or not. “That is where the problem comes in. Sars often does not adhere to this timeline. However, it is very strict with the timelines given to the taxpayer to submit their objection. If the time to submit the objection has expired, the objection would be invalid.”

It’s then necessary to show grounds for lateness, which becomes a new set of requirements the taxpayer must meet.

If there were reasonable grounds, Sars could extend the time to object by another 30 days. Taxpayers could also plead “exceptional circumstances” for being late and these objections could still be accepted up to three years from receiving the assessment.

Once the objection has been declared invalid, taxpayers have 20 days to submit a new objection. Although Sars offered reasons in the notice for rejecting the initial objection, they weren’t always comprehensive. Once the new objection has been filed the process starts again within the stated timelines. If the objection is again declared invalid, the taxpayer may appeal.

Alternative route

Usually, at this stage taxpayers opt for the Alternative Dispute Resolution route where a Sars representative and the taxpayer attempt to resolve the matter with a Sars-appointed facilitator. The outcome can be a settlement, withdrawal of the appeal, or no settlement and the matter goes to court.