Basically, a time bar is a limitation of the amount of time a litigant has to bring a matter before the court. This might be a decision of the tax authority or an assessment or objection that’s been disallowed. The time bar is often raised by tax authorities when they don’t wish to deal with the merits of a matter.
This often goes hand in hand with the reluctance of taxpayers to take the revenue authority to court, as they believe – rightly or wrongly – they’ll be singled out for ‘persecution’ by the tax authority thereafter. In South Africa, the rules of the various tax statutes have recently been consolidated – more on this below. But in the rest of Africa, when taxpayers are dealing with tax authorities across the border, time limits they may not be aware of can operate against them.
I would therefore advise any taxpayer who has a business interest in a foreign jurisdiction to not only obtain information pertaining to the time requirements of the various taxes, general sales tax or VAT, but also to obtain a copy of the rules of court of that jurisdiction. If a tax dispute is called, the taxpayer can then do all that’s necessary to protect their rights well within the allowable time limits.
I would, in fact, advise those who operate in Africa and elsewhere that, when negotiating disputes with tax authorities, they obtain, in writing, assurances that High Court time bars won’t be held against them if negotiations fail. In a recent Botswana Appeal Court judgment, the Judges of Appeal were of one mind that, where a taxpayer astutely stands up for his rights and keeps up the pressure in terms of correspondence and meetings in order to finalise his tax affairs, the time thus spent will not count against him.
This overturned an earlier decision of the High Court of Botswana, where the judge wasn’t prepared to come to the assistance of a taxpayer who had met with the tax authority, negotiated penalties and interest on taxes that were not owing in his view, and had done what any reasonable person would have. When dealing with tax (or other government) agencies within Africa, always keep good records of each meeting and piece of correspondence, and record names and dates.
In South Africa, the comprehensive Tax Administration Act of 2011 now regulates the aspects of legal proceedings. It deals with all the various taxes that can be imposed by SARS and it seems handy to have all the procedures in respect of the different taxes under one act. The common law relief that’s to be obtained under a review of an action by the tax authority isn’t excluded under the new act.
But note that, if the High Court is to be approached for relief, its rules must also be borne in mind when such action is contemplated.
Peter O’Halloran is head of tax at BDO, Gaborone. Contact Peter at 00267 390 2779 or at [email protected]. Please state ‘Tax’ in the subject line of your email.