But, why is this so difficult?
There are many theories – that is also why the Tax Ombudsman was granted permission to investigate VAT refunds and released its rather damning report.
It is understandable that, given the number of fraudsters and chance-takers in the market, hesitance on the part of SARS should be present, rather than simply handing out refunds to every VAT claimant without careful scrutiny. The SARS auditor is obligated to correctly apply the law.
Perfect Storm
Many compliant taxpayers feel they are mistreated on their VAT refunds. This may be partly due to the perfect storm of a shrinking economy, financial strain, administrative delays and perceived deliberate delays in when SARS owes you money, compared to their super efficiency when you owe them. These delays and difficulties are placing financial strain on the small to medium enterprise fraternity, and with some of our clients we have seen this comes down to survival.
SARS Auditors and Dispute Resolution
The first rule is being courteous with your SARS auditor. The tax law has plenty of teeth and please do not underestimate the auditing powers bestowed upon SARS officials. But what do you do when you are faced with bureaucratic hoops created by constant requests for documentation that support the rebate, and obviously SARS is not allowed to be vexatious?
The Tax Administration Act, read with the Rules promulgated under section 103, provides a very strong and balanced SARS dispute resolution process. The normal accountant or attorney can deal with the process of Alternative Dispute Resolution, complaint escalation and even Tax Ombudsman submission, but we find this sometimes has limited results.
When you know you are correct, there is always the right of access to the Tax Board or Tax Court. It is never a good idea to approach the court on weak facts, so we insist that our first step of professional engagement is a proper review of the merits. Where you are one of the compliant taxpayers, consider fast tracking your matter.
The legal route is very much embedded in our tax law as part of the Dispute Resolution process and we foresee that the correct representation will become an integral part of resolving complex and high value SARS matters.
Click here to read more about the Dispute Resolution (ADR) process.