A recent Johannesburg High Court judgment has highlighted the limits of the South African Revenue Service’s (SARS) discretion when refusing to reconsider tax assessments, particularly where tax returns have allegedly been submitted fraudulently by persons acting without the taxpayer’s authority.
Richan Schwellnus
Team Lead: Tax Controversy & International Tax at Tax Consulting SA.
In TEG Asset & Risk Management CC v Commissioner for the South African Revenue Service (Case No. 2023-110354), delivered on 8 October 2026, the High Court reviewed and set aside two decisions by SARS refusing to issue reduced assessments.
The judgment provides an important reminder that SARS must properly consider the circumstances surrounding disputed tax returns, rather than relying exclusively on the formal appointment of a juristic taxpayer’s public officer.
For taxpayers facing substantial historical tax liabilities arising from the conduct of accountants or tax practitioners, the decision offers valuable insight into the remedies available under the Tax Administration Act, No. 28 of 2011 (TAA).
When Tax Compliance Goes Wrong
The dispute concerned Income Tax and Valued Added Tax (VAT) assessments relating to the taxpayer’s 2017 tax year and various VAT periods between 2015 and 2017.
The taxpayer had appointed an accountant in 2010 to manage its accounting affairs, including the submission of tax returns. Unbeknownst to the taxpayer, the accountant had subcontracted certain tax compliance responsibilities to another consultant, who allegedly submitted returns without the taxpayer’s authorisation.
Following an audit, SARS issued assessments which the taxpayer disputed. According to the taxpayer, SARS had incorrectly treated certain bank deposits as income, and payments as expenses, because the necessary supporting documentation had not been provided.
The situation deteriorated when SARS recovered funds directly from the taxpayer’s bank account in June 2020. Despite assurances from his accountant that SARS had made an error, the taxpayer subsequently discovered substantial outstanding tax liabilities.
Thereafter and in October 2022, the taxpayer’s attorneys formally requested reduced assessments under section 93(1)(e)(iii) of the TAA, contending that the returns had been fraudulently submitted by an unauthorised person.
SARS rejected the request, reasoning that the accountant was the taxpayer’s appointed public officer and that the statutory provision therefore did not apply. Following a further unsuccessful engagement with SARS, the taxpayer approached the High Court.
What Does the Tax Administration Act Provide?
Broadly speaking, section 93 of the TAA provides circumstances in which SARS may issue reduced assessments outside the ordinary objection and appeal process.
Of particular relevance, section 93(1)(e)(iii) permits a reduced assessment where a senior SARS official is satisfied that an assessment was based on a return fraudulently submitted by a person not authorised by the taxpayer.
In considering this provision, the High Court identified two distinct requirements. First, the return itself must have been fraudulent. Second, the return must have been submitted by someone who was not authorised by the taxpayer to submit returns.
This distinction is significant. The mere fact that a return was submitted by someone other than the taxpayer’s public officer does not automatically render that return fraudulent. Equally, the appointment of a public officer does not necessarily establish that another person who actually submitted the return was authorised to do so.
The Court therefore distinguished between the legal appointment of a public officer and the factual question of who submitted the disputed returns, and under whose authority.
SARS’s Reasoning Falls Short
The central issue before the High Court was whether SARS had lawfully refused to consider reduced assessments on the basis that the taxpayer’s accountant was its validly appointed public officer.
Although the Court accepted that the accountant had indeed been validly appointed, this did not resolve the separate allegation that another consultant had submitted the returns without authorisation. Importantly, the taxpayer’s allegation regarding the consultant’s lack of authority was not denied in SARS’s answering affidavit.
At paragraph 30 of the judgment, Wright J concluded that SARS’s stated one reason for refusing the requests was incorrect, particularly in light of the undisputed allegation concerning the unauthorised consultant, stating that:
“On the evidence before me, particularly the allegation that Ms Buitendag submitted the returns without being authorised by TEG to do so, which allegation is not denied, the reason for the decisions is wrong. Review of the decisions must follow and the matter must go back to Sars for fresh Consideration”.
The Court accordingly found grounds to interfere with SARS’s decisions. Both SARS decisions, dated 28 October 2022 and 23 February 2023, were reviewed and set aside, with the matter referred back to SARS for fresh consideration.
SARS was also ordered to pay the taxpayer’s legal costs, including counsel’s costs.
However, the judgment must not be interpreted as a finding that the disputed returns were definitively fraudulent or that the taxpayer was automatically entitled to reduced assessments.
Rather, the Court determined that SARS’s reasons for refusing the requests could not stand and that the matter required reconsideration.
Taxpayers Cannot Simply Blame Their Accountants
Despite the taxpayer’s success, the judgment also contains an important warning. At paragraph 28, Wright J also emphasised that the obligation to furnish correct and timeous tax returns ultimately remains with the taxpayer:
“No person could ever be lawfully authorised to submit a fraudulent return. A return is not fraudulent just because it is submitted by a person who is not the public officer of the taxpayer. At the end of the day, the obligation to furnish correct, timeous returns remains that of the taxpayer.”
This means that appointing an accountant, tax practitioner or public officer does not automatically absolve a taxpayer of responsibility for their tax compliance. Where a practitioner acts negligently, fraudulently or without authority, taxpayers must still establish the legal and factual basis for obtaining relief from SARS.
Furthermore, allegations of professional misconduct do not, without more, establish that the requirements of section 93(1)(e)(iii) have been satisfied. The Court also observed that the relevant facts had not always been clearly presented to SARS. Indeed, the significance of the unauthorised consultant’s involvement only became apparent through the taxpayer’s founding affidavit.
This highlights the importance of properly prepared representations, supported by clear documentary evidence, when seeking administrative relief.
What Does This Mean for Taxpayers in Dispute with SARS?
The judgment reinforces that SARS’ administrative decisions are not beyond scrutiny, and taxpayers may challenge decisions believed to be founded on incorrect reasoning or a failure to properly consider material circumstances.
For taxpayers discovering historical assessments arising from potentially unauthorised or fraudulent submissions, section 93 may provide an avenue for relief, provided its statutory requirements can be established.
However, the appropriate remedy will depend on the circumstances of each matter. The reduced assessment mechanism should not be confused with the ordinary objection and appeal procedures, nor should it be treated as an automatic solution to missed dispute deadlines.
The judgment also illustrates why taxpayers should act promptly when discovering irregularities involving their tax practitioners, including securing their eFiling access, obtaining historical submissions and correspondence, and preserving evidence of the practitioner’s authority and conduct.
Ultimately, the lesson is twofold: taxpayers remain responsible for their tax affairs, but SARS must exercise its statutory powers lawfully and on a proper consideration of the relevant facts. Where SARS refuses to reconsider disputed assessments, particularly where fraud or unauthorised submissions are alleged, obtaining specialist tax dispute resolution advice may be critical to identifying the appropriate legal remedy and protecting the taxpayer’s position.
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