Sars unduly delayed refunds
Tax Ombud says revenue collector’s system flawed.
he Tax Ombud’s found that Sars’ system allowed it to unduly delay the payment of verified refunds to taxpayers in certain cases.
“This has become a systemic issue. The system does not sufficiently protect taxpayers,” Judge Bernard Ngoepe said in his report, following an investigation into tax refund delays by his office.
In response to Sars’ assertion that complaints affected less than 1% of refunds, the Tax Ombud warned the impact of delayed refunds on each of the 1% of taxpayers could be devastating and might even lead to near closure of businesses due to lack of cash flow.
“The problem therefore remains serious. In any case, whereas the 630 credits from the sample given by Sars may indeed constitute less than 0.01% in terms of numbers, their monetary value is, however, a whopping R25.86 billion.”
Ngoepe found a number of complaints related to unduly delayed refunds were justified. “The refunds could and should have been paid earlier. In such instances, no satisfactory explanations were given by Sars for the delays.
“Some of the mechanisms employed by Sars… have justifiably given taxpayers the impression that Sars’ intention is, at least in some instances, to avoid parting with the money it should pay out.”
Chérie Carstens-Petersen of the South African Institute of Tax Professionals, said there was a general tone throughout the report, and in other commentary from Sars, that everything was done in an effort to prevent fraud.
“While this is appreciated, Sars needs to realise that they cannot paint all taxpayers with the same brush. It’s easy to say blame all the delays and extensive processes on fraud prevention – meanwhile, the good taxpayers are suffering while their businesses close down. The systems need to be more streamlined and efficient with the ability to pick up on fraudulent activity.”
Patricia Williams, of Bowmans, said the Ombud had already reached a preliminary conclusion that was sent to Sars, and its responses reflected a defensive, “non-problem solving” approach.
“In the circumstances, absent intervention from other relevant parties (for example oversight and required reporting from the minister of finance), it appears unlikely that publication of this report would result in substantial change by Sars.”
Williams said Sars was quoted as referring to the system blocking refunds, either when new returns were created or filed or when different tax periods were audited, which was unlawful, and yet it did not indicate any action taken to remedy the unlawful action that was clearly systemic.
Gerhard Badenhorst of Cliffe Dekker Hofmeyr said: “We can only hope that Sars will seriously consider and implement all the recommendations of the Tax Ombud in an attempt to improve the timing of the payment of refunds.”
Sars said it had implemented corrective measures, and would continue to do so to close the gaps identified in the report.