The South African Revenue Service (Sars) has made additional changes to improve its alternative dispute resolution (ADR) process. This follows the significant changes that were announced in March this year.
The latest changes are again welcome from a practical perspective. The ADR process offers another route, other than litigation, or adjudication through the courts.
It is supposed to be less formal, less cumbersome, and less adversarial. It is also supposed to be a more cost-effective and speedier way to resolve a dispute with the tax authority.
The changes announced in March were mainly in favour of taxpayers and were described as a step in the right direction.
One of the most significant changes was the time taxpayers have to object to an assessment or decision by Sars. Under the old rules, they had 30 business days, but this has now been extended to 80 business days.
Some of the latest changes are:
Calculation of a disputed amount
On the submission of an appeal, the calculation of the value of the amount disputed will be automated. This will reduce the time taken in internal allocations, improve the accuracy of suspensions of payment, and assist internal reporting on disputed debt.
Nico Theron, managing partner at Unicus Tax Specialists, believes this is a good move. It will also be easier for Sars to identify when taxpayers place an issue on appeal that was not raised during the objection process.
Updating taxpayer contact details
Taxpayers will now be able to amend their contact details for the purposes of their tax dispute on eFiling. This will also allow them to include the contact details of their representative dealing with the tax dispute.
Theron says this functionality will ensure that the person dealing with the dispute is kept in the loop. Historically, if the person dealing with the dispute changed, correspondence on the dispute would have gone to the previous official.
Request for reasons
Sars will supply automated “request for reasons” outcome letters. Theron says this can be “good news or bad news”. This seems to suggest that where Sars believes reasons were already provided (if an audit finalisation or adjustment letter was issued), the letter or notice advising the taxpayer that reasons have already been provided will now be issued automatically.
In practice, taxpayers often request reasons even if a letter of audit findings was issued, because they may need reasons on a particular audit finding.
“I am worried that if they are now going to issue these notices automatically because there is a letter of audit findings, they won’t respond to your particular request,” Theron says.
He believes it will be difficult to automate this. “When something needs to be considered by a human being and that something is never constant, then it’s going to be a struggle to automate it, if at all possible.”
Appeals and automated letters
Sars will issue an automated notice confirming that an appeal is suitable for ADR. Theron hopes it will address delays during this part of the process.
However, a Sars official must still consider whether the appeal can be resolved through ADR, and it remains unclear how the automation of the letter will, on its own, solve the lateness issue.
Sars will also issue an automated notice that the period for the ADR proceedings is extended. Theron regards this as “potentially dangerous”. ADR proceedings must be completed within a set timeframe unless the taxpayer and Sars agree on an extension.
“If these letters are automated, I am worried that the requisite agreement for extension may not be reached and that it will rather be a unilateral decision to extend.”
An automated letter will also be issued giving notice that the ADR proceedings have terminated. This is “probably” good news because often, in practice, formal termination notices are not provided when proceedings are terminated.
At least if there is a formal notice, the next steps will be clear and so too the timing of the next step.
However, Theron has some reservations because a system cannot on its own terminate proceedings, but he suspects that a Sars official will instruct the system to generate the termination notice automatically.
He also has reservations about the automated letter confirming the outcome of an appeal. “This sounds like good news, but again, I am not sure how this will be automated.”
Theron says ADR results in a settlement, an agreement, termination, or a combination of these. “Each case is different, so I am worried that an automated letter might miss the nuances of a particular case,” he adds.
Joon Chong, tax partner at Webber Wentzel, says although the new rules are a positive step forward, taxpayers and their advisers should be aware of the changes, particularly on the changes to timelines announced in March.
Amanda Visser is a freelance journalist who specialises in tax and has written about trade law, competition law and regulatory issues.
Disclaimer: The information in this article does not constitute tax or legal advice.
