‘Tax cases are often mismanaged from the outset. So how does one do it right the first time?’
Tax law is an extremely complex and wide-ranging field. A tax lawyer might be asked to investigate the chances of successful litigation against the tax authorities in a number of different fields. These include income tax, value added tax, estate duty, donations tax, capital gains tax, and excise and customs duties. Some basic questions have to be answered when one is dissatisfied with one’s taxation position, or feels one isn’t being treated fairly by the authorities.
Has an assessment been issued? If so, what is the date of issue?
What type of tax is being dealt with and who is dealing with the problem?
What is the timeframe for possible resolution and which forum is to be chosen?
The most important question is this: as a taxpayer, am I willing or able to spend money on the solution? This is where the fundamental problem lies in all tax disputes.
A tax problem is always complex. It demands a written reply or response within a set amount of time. For the initial objection this is usually 30 days.
The objection is the most important step. Typically, the taxpayer and his accountant go see the tax authority in person to discuss the problem. This might be appropriate in a small number of cases. However, the risk is that the time for lodging a written objection might lapse, or the solution might not be satisfactory and time and effort are wasted.
In South Africa only a very small number of tax disputes go to the High Court, because cases are often mismanaged from the outset. So how does one do it right the first time?
In for the long haul
First, the taxpayer, if the amount in dispute is material, has to be willing to allocate some reasonable resources to the problem. The tax authorities’ legal team will spot a really good objection to the case, so if there is one, save yourself the time and money.
Your accountant should be taken along to the offices of a tax law specialist with a view to drafting a very comprehensive objection. At least one Supreme Court of Appeal matter has been limited because the initial objection wasn’t drafted widely enough.
This limited the grounds on which the lawyers could later attack. Every possible angle should be covered, from technical tax law to the more subjective administrative law actions of the tax authorities.
This ensures every possible argument (each with its own chances of success) is brought to the attention of the judge hearing the final argument. No-one can know how far a dispute will go. Some go all the way to the Supreme Court of Appeal. The original objection should cater for that.
The Romans had a saying “Pacem? Parabellum!” – if you desire peace, prepare for war. It pays to keep the documentation the revenue service requires up to date and respond timeously to their correspondence. Make notes of conversations with the tax authorities and accounting personnel and refer to such dates and people in follow-up correspondence. Be aware that anyone is at risk from the tax authorities and deal with them as with a malicious creditor – which they could become at any stage. This will pa
y dividends in the long run. |fw
