In the already notorious Pretoria East Motor's case, SARS imposed 200% additional tax. However, it couldn't prove any of the errors Pretoria East Motor's made were with the intention to evade tax. Moreover, the Court allowed their objection against the additional tax. And it reduced understatement penalties to nil.
There are two key lessons you can learn from this case. And today, we're sharing them with you.
Lesson #1: You should not just accept assessments from SARS!
One most of the issues in the case we mentioned, was that SARS was wrong. If, like Pretoria East Motors, SARS disallows your objection, you can lodge an appeal. Once the appeal process has started, you can resolve your dispute in three ways.
Let's take a look:
Here are three ways to resolve your SARS dispute
1. Alternative dispute resolution (ADR)
This is an alternative to the traditional legal route of the Tax Court. And it's great becuase it's not as costly and time-consuming as litigation. SARS appoints a facilitator to mediate the process. You'll meet informally with SARS and the facilitator.
You must state your case with proof of your arguments. If you reach a resolution, SARS will issue a revised assessment. But, if you don't settle the matter, you can still appeal to the Tax Board or the Tax Court.
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2. The Tax Board
If the amount you're disputing is less than R500 000, you can take your case to the Tax Board. This is a formal tribunal and unlike the ADR process, it's more structured.
A chairperson who's usually an advocate or attorney, will judge your case.
Keep in mind that the procedure before the Tax Board follows the rules of the Tax Administration Act and the rules for dispute resolution issued under Section 103 of the Tax Administration Act. This is less formal than the Tax Court as the chairperson decides how to conduct matters. Both parties have a chance to state their case.
Note that there's a 60 business-day wait for a Tax Board decision! If you're not happy with the findings of the Tax Board, you can go to the Tax Court.
3. The Tax Court A judge or acting judge of the High Court will hear the case. He'll have an accountant and a representative of the commercial business community to help him reach his judgment.
In this case, you must follow court rules including how you present your evidence.
If you're unhappy with the Tax Court's decision, you can appeal to the High Court or the Supreme Court of Appeal.
Lesson #2: As a final note and a second lesson, the Pretoria Motor's case also illustrated the need to make sure you comply with the Tax Administration Act; else SARS will charge you penalties and interest.