Sometimes, tax advisors are called upon to straighten out a tax problem involving a disagreement between SARS and the taxpayer on the interpretation of tax law. In this case, it is best to ensure that not only is the actual dispute between the parties settled, but there is no room for dissension on the part of the authorities that would cause them to re-look at the matter.
READ:Veld fires remain a real danger to long-term sustainability
In short, put out that veld fire properly! Here is a case in point. Recently, a taxpayer had certain pension payments suddenly re-assessed to tax. It was proved to SARS that the pension payments had been correctly taxed, and an assessment was issued in the taxpayer’s favour.
But then a new issue arose. The authorities took it upon themselves to take another look at the other income received at the point of receipt of the pension payments and add tax to that! Had the taxpayer’s legal team addressed the additional issues of income in the same year adequately during the first submission, the second round of dispute resolution proceedings would have been unnecessary.
My advice to those who face challenges from SARS from time to time would be to adopt a robust approach to tax disagreements:
- Define
Identify the problem. This is often easier said than done – you will need an experienced tax law practitioner here.
- Precedents
The law that applies not only to the problem, but to the problem as it occurred at that point must be found. Tax law changes so often that the correct answer in year X may be totally wrong in year Y.
- Sideshows
Identify the peripheral issues that could turn into challenges in the year in question.
As seen in the example
of the pension payouts cited, the issue of additional income would normally alert an experienced taxman to the possibility that the remaining income would be re-assessed. The law surrounding these and other peripheral issues must then be noted carefully.
- Evidence
Find the evidence required to prove the thesis, that being the taxpayer’s point of view.
It is assumed that the taxpayer has a case at this point. If this is not so, the best course is to admit the fact and try to minimise the damage in terms of penalties and interest.
Affidavit
Once all the evidence is gathered, the tax lawyer will draft an affidavit. This, with its supporting documents, will then be served upon SARS. It will be a helpful tool not only in the dispute, but also in the enlightenment of the officials who deal with the matter. If this is achieved, success should follow and the matter will have been adequately addressed.
As I suggested earlier, think of the process as putting out a veld fire. Make sure no embers remain that could flare up and force the firefighters to return to the scene!
