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Do you know how to raise an objection to an assessment?

by , 09 July 2013
Vat is a self-assessment tax. Essentially this means, if you're a registered Vat vendor you're an unofficial (and unpaid) tax collector. The system relies on you to pay the correct amount of Vat, but it's backed up by periodic audits performed by SARS on your tax and other business records. But what happens if you disagree with a SARS assessment and believe it's made a mistake with your company's Vat affairs? Read on to discover how you can raise an objection to a SARS assessment.

As a Vat vendor, you have to determine the net Vat amount due or refundable amount by deducting (from the output tax levied on the goods or services you provide) the qualifying input tax that you pay on expenses, the Practical Vat Loose Leaf Service explains.

Where your output tax exceeds your input tax in a tax period, then that difference has to be paid to SARS. If your input tax exceeds your output tax for a tax period, SARS will have to refund you the excess.

If SARS disagrees with how you've calculated your company's Vat, they'll raise an assessment on your Vat affairs. This is an indication that they want to investigate any transgressions on your part.

But what happens if you disagree with its actions? Do you have a recourse or way to object and state your case and if so, how do you go about objecting to the assessment and trying to reach a resolution with SARS?

Step by step: How to raise an objection to an assessment

Step # 1: Examine the notification

Once you receive notification from SARS that an assessment will be raised against your Vat affairs, examine the notification. It must give you reasons for the assessment. Don't just blindly pay up if you disagree with the assessed amount or feel there're factors that SARS should take into account regarding your Vat affairs.

Remember, in terms of your constitutional rights, SARS must first provide notification of its intention to raise an assessment and give its reasons in writing. This is done in a letter of audit findings

Step # 2: Your opportunity to object is here

Once you're aware of and understand the reasons for the assessment SARS has raised against you, and you disagree with the assessment and the reasons SARS has given, you may object against the assessment.

Here's how to object in four easy steps:

  • Fill in the formal objection form, the ADR1;
  • Specify the reasons for your objection in detail;
  • Sign the form; and
  • Deliver the form to SARS at the address specified in the assessment notice.

Keep in mind that, you've got only 30 business days from the date of issue of the assessment in which to lodge your objection.

In addition, your objection must comply with all the requirements as listed above. If you make a mistake and omit one of the details, your objection will be invalid. You may submit an amended objection, but this delays the process.

So take the time to double check your form and make sure you've entered all the vital information, before you send it to SARS.

What happens after you've raised an objection to an assessment?

SARS must provide you with written reasons within 90 business days after receiving your objection.

If your objection is unsuccessful, you can appeal within 30 business days, using a form ADR2.

This means your appeal will now be heard by an ADR facilitator, or by the Tax Board or Tax Court. And once these avenues are exhausted, you can take the matter before the High Court, the Supreme Court of Appeal or the Constitutional Court in certain circumstances. Just keep in mind this comes with a heavy financial burden.

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