The recent Absa Bank Limited and Another v Commissioner for the South African Revenue Service (21825/19)  ZAGPPHC 414 (25 August 2020) judgement, highlighted the importance of knowing the actions that SARS is allowed and required to take, the due process to be followed when disputing an assessment and your rights as a taxpayer.
THE ABSA JUDGEMENT
SARS alleged that the applicants (i.e. Absa Bank Ltd and Absa Towers (Pty) Ltd) conceived an impermissible avoidance arrangement and applied the general anti-avoidance regime (“GAAR”) to issue additional income tax assessments to the applicants.
The applicants requested the withdrawal of the GAAR notices issued by SARS in terms of section 9 of the Tax Administration Act No. 28 (2011) (“TAA”). Said section entitles a taxpayer to request that a decision made or a notice issued be withdrawn or amended.
SARS refused to withdraw the GAAR notices issued. The applicants then proceeded to approach the High Court directly to review SARS’ refusal to withdraw the notices.
The High Court confirmed that a taxpayer is not required to exhaust internal remedies in respect of a tax dispute and that judicial intervention may be appropriate in exceptional circumstances. This is further supported by section 104 of the TAA that allows the High Court to approve a deviation from the default tax dispute resolution process where the circumstances justify an alternative route.
It is important to be aware of your rights as a taxpayer. The Absa judgement has made it clear that a taxpayer has access to internal remedies via the tax dispute resolution process, but that exceptional circumstances may also warrant intervention by the High Court.
However, the presence of exceptional circumstances will be evaluated on a case-by-case basis. Therefore, not all disputes may qualify for direct judicial intervention. Where disputes do not qualify for direct judicial intervention, a taxpayer should follow the following internal tax dispute resolution process:
- Requesting reasons for an assessment.
- Objection against an assessment.
- Appeal via the alternative dispute resolution process, the tax board or the tax court
- Appeal via the High Court.
- Appeal via the Supreme Court of Appeal.
- Appeal via the Constitutional Court.
Whichever route is taken, it is of utmost importance that due process is followed and that the grounds on which the objection, appeal or a judicial intervention request is based are properly formulated.