The High Court in Pretoria recently ruled that you have the right to be notified before the South African Revenue Service (SARS) appoints an agent to collect any outstanding tax debts you or your business owe the taxman.
Althea Soobyah, tax consulting director at auditing firm Mazars says the judgment is a victory for both taxpayer rights and the wider cause of administrative justice.
“SARS can collect outstanding tax debts using several methods, but each has specific procedures that must be followed to ensure due process, especially when a third party is involved. A recent High Court judgment confirmed this, and in doing so, also confirmed the administrative justice principle of providing sufficient notice to the taxpayer prior to appointing an agent for the collecting of outstanding debt,” Soobyah says.
She says the case is a perfect example where rights of the taxpayer prevailed over the powers conferred upon the Commissioner of SARS. In the case SIP Project Managers vs SARS Commissioner, the High Court reinforced the criteria spelled out in the Tax Administration Act to which SARS must comply when collecting tax debts. They are:
- There must be a tax debt;
- The due date for payment of the tax debt must have expired;
- A letter of demand must be delivered to the taxpayer at least 10 days prior to issuing a notice to a third party who holds monies for and on behalf of the taxpayer concerned;
- The letter of demand delivered to the taxpayer must set out the recovery steps to be taken should the tax debt not be paid; and
- The letter of demand must also specify the relief mechanisms available to the taxpayer.
“SARS is therefore obliged to notify the taxpayer of its intention to use collection methods (such as appointing an agent) before making use of such provisions,” Soobyah says.
“Another important point to note from the judgment is that the letter of demand must be delivered to the taxpayer (via electronic platform or to the last known address of the taxpayer). A notice generated by the eFiling system does not satisfy the requirement of delivery unless such notice is uploaded on to the taxpayer’s profile,” she says.