The South African Revenue Service (Sars) has given the assurance that it will investigate matters where money was taken from taxpayers’ bank accountants after they had lodged requests for the suspension of payments.
Tax practitioners highlighted instances where millions of rand have been attached from taxpayers’ accounts even though the dispute process has not been finalised.
Clement Manyaapelo, acting group executive of tax collections at Sars, said once a formal application for the suspension of payment has been lodged, Sars cannot issue a letter of final demand or have a third party appointed to collect the debt.
He said during a panel discussion at the annual Tax Indaba the fact that it happens cannot be attributed to system problems. “We should not have issued a final demand where there is a suspension. If there are cases like this we are happy to investigate.”
He said the debt book has grown to R150 billion and it remains his responsibility to resolve matters which threaten the collection of outstanding debt.
Elle-Sarah Rossato, associate director at KPMG, remarked on the quality of assessments and the communication, or the lack thereof, between debt collectors and auditors.
Sars might be struggling to manage a massive debt book, while not all the debt is collectable, or there are assessments that should not have been raised in the first place.
“Maybe the argument is that if the quality of assessments had been better the debt book would not have been so huge and collections could have been quicker and easier.”
Manyaapelo said part of the problem was proper communication, whether it was internal communication within Sars, or with taxpayers.
He noted that in instances where procedure was not followed, Sars had paid back the money that was attached.
Rossato gave an example where one of their clients lodged a request for the suspension of their debt, only to see R5 million disappear from their bank account a few days later.
It took a month before the money was paid back, with interest, into the taxpayer’s account.
Stephan Spamer, head of tax at Baker McKenzie, questioned the fact that the irregular attachments continued despite the fact that the taxpayer has lodged a request for the suspension of payment.
He also noted that in cases where Sars acted outside the provisions of the Tax Administration Act (TAA), taxpayers were in some instances forced to turn to the courts to get their money back.
This is a costly exercise for taxpayers, he remarked.
Manyaapelo said taxpayers were within their rights to take Sars to court. However, he advised taxpayers to escalate the matter to Sars’ head office in Pretoria to try to find a suitable solution before spending money on court proceedings.
He, however, acknowledged the frustration of taxpayers who battle to get answers from Sars and then see litigation as their only option.
He invited taxpayers or their practitioners to contact his office directly if they were not getting the answers they were looking for. He said debt owed to Sars must at all times be paid, but there are options to assist taxpayers on how it is paid.
Betsie Strydom, tax partner at Bowmans, explained that the TAA allows Sars to suspend payment after considering certain factors.
This includes whether the amount due is in jeopardy (about to disappear), whether there is fraud involved, what the compliance history of the taxpayer is, and whether there is irreparable hardship for the taxpayer. These considerations have to be balanced out with the potential loss to the fiscus.
Sars will also consider whether the request is frivolous or a mere tactic to delay matters. Strydom said it was critical to supply Sars with a thorough motivation for requesting the suspension.
The request is brought before a committee on behalf of a Sars official who has made a recommendation whether to suspend or not.
Strydom noted that, in many instances, the official has already formed a view and may be hell-bent on collecting the tax.
Manyaapelo said the committee can override a recommendation if it was clear from the analysis that the official did not understand the industry. Taxpayers can take a decision not to suspend payment on review.
In some instances taxpayers have requested a meeting with Sars to explain their position and the initial denial for suspension has been overturned, he said.
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