The South African Revenue Service (Sars) failed to resolve more than 80% of complaints submitted by the Office of the Tax Ombud (OTO) within the agreed timeframe of 15 business days in 2021/22, according to the OTO’s latest annual report.
Of the 1 561 complaints resolved in 2021/22 (2020/21: 1 340), only 16.72%, or 261, were finalised within 15 business days, in accordance with the Memorandum of Understanding (MoU) between the OTO and Sars. It took Sars more than 90 business days to finalise 21.2% of the OTO’s recommendations.
“Sars’s non-adherence to the MoU timeframes remains a concern and has been escalated to the senior leadership of the revenue authority,” the OTO said.
The 1 561 resolved complaints consisted of unresolved complaints brought forward from the previous reporting periods and complaints accepted in this reporting period. Of the 1 561 finalised complaints, Sars implemented 98% of the OTO’s recommendations.
The annual report does not provide the total rand amount of refunds paid to taxpayers because of the intervention of the OTO. It does provide the 10 highest-value tax refunds paid to taxpayers. These exceeded R215 million, an increase of more than 38% compared to R156m in 2020/21.
Most of the top 10 refunds related to value-added tax (VAT), with the largest VAT refund exceeding R54m.
More complaints about criminal investigations
Sars audits and criminal investigations comprised most (41%) of the complaints validated and accepted by the OTO in 2021/22.
The OTO said this was the first time in the office’s nine-year history that complaints related to criminal investigations made it into the list of the 10 most frequently raised issues in complaints referred to Sars for resolution.
Another change from previous years was that complaints related to tax refunds were no longer among the top three, falling to fifth place, at 5.49% of complaints. The OTO said this could be because taxpayers are receiving their refunds quicker and there is no need to complain.
The second-biggest category of complaints referred to Sars related to the resolution of disputes (appeals and objections), at 14.09%.
Increase in complaints accepted
When a complaint is submitted to the OTO, it is evaluated and reviewed. A complaint that does not fall within the mandate of the Tax Ombud or is affected by any of the limitations to the Tax Ombud’s authority is rejected. Valid complaints that fall within the mandate of the Tax Ombud are accepted, and the recommendations are sent to Sars for resolution.
Individual taxpayers were responsible for 44.1% of validated complaints in 2021/22 and taxpayer representatives for 55.8%.
The total number of accepted complaints increased by 36%, from 1 512 in 2020/21 to 2 058 (including 383 that were later terminated). The number of terminated complaints increased from 262 in the previous year to 383.
Main reason complaints are rejected
The OTO rejected more complaints (47.9%) in 2021/22 than in the previous year. The number of rejected complaints increased from 1 340 in 2020/21 to 1 892.
The main reason (96.51%) for rejections was that the complaints were lodged with the OTO prematurely and had not first been submitted to Sars’s Complaints Management Office. In terms of section 18(4) of the Tax Administration Act, the Tax Ombud may only review a request if a taxpayer has exhausted the complaints resolution mechanisms at Sars, unless there are compelling circumstances for not doing so.
