SARS says no. That does not mean SARS is right

SARS refuses a request for a reduced assessment because the taxpayer’s accountant was its legally appointed public officer. The reasoning appears simple enough: the public officer was authorised to deal with the taxpayer’s affairs, so the taxpayer cannot complain that returns were submitted without authority.

There is, however, a fairly obvious problem with that reasoning. The appointment of a public officer does not answer whether the person who actually submitted the returns had authority to do so.

The recent judgment in TEG Asset & Risk Management CC v CSARS illustrates the point.[1]

The taxpayer appointed an accountant to provide accounting services, including submitting tax returns. The accountant, in turn, subcontracted the submission of returns to another person. According to the taxpayer, that person had never been authorised to submit its returns. SARS did not deny that allegation.

The taxpayer subsequently requested reduced assessments under section 93(1)(e)(iii) of the Tax Administration Act (“the TAA”). That provision permits SARS to reduce an assessment based on a return fraudulently submitted by a person not authorised by the taxpayer.

SARS refused. Its reason was that the accountant was the taxpayer’s legally appointed public officer.

The High Court correctly rejected that reasoning and referred the matter back to SARS for reconsideration. The accountant’s status as public officer did not dispose of the allegation that someone else had submitted the returns without authority. Equally, the court recognised that unauthorised submission does not, by itself, establish fraud.

SARS’s stated basis for refusing the requests was plainly wrong. But there is a further question which deserves attention when SARS reconsiders the matter.

Section 93(1)(e)(iii) requires more than a fraudulent return and an unauthorised submitter. The assessment sought to be reduced must also have been based on that return.

The court identifies two requirements in paragraph 29. It does not meaningfully examine this third requirement.

Why does that matter? Because a return may trigger an audit without forming the basis of the assessment eventually issued following that audit.

In our experience, where supporting documents are not forthcoming, SARS frequently reconstructs the taxpayer’s accounts using bank statements. The resulting assessment may therefore rest on SARS’s treatment of bank deposits and payments, rather than the information disclosed in the return.

Indeed, paragraphs 15 and 16 of the judgment suggest that difficulty precisely. The taxpayer complained that SARS treated deposits as income and payments as expenses because supporting documentation had not been supplied. The court also observed that the reduced-assessment request did not expressly allege that the returns were incorrect.

The history of section 93(1)(e) gives this distinction further significance. As discussed in Practical Guide to Handling Tax Disputes, the provision addresses specified causes of adverse assessments outside the taxpayer’s control, of a kind often discovered only after the ordinary remedies have expired.[2] The 2015 explanatory memorandum expressly identifies that concern.[3]

This does not mean taxpayers must wait for prescription before relying on section 93(1)(e). It does mean that the provision must be applied with proper regard to what caused the assessment.

Here, the taxpayer knew about the audit. That knowledge does not automatically exclude relief. It does, however, require closer consideration of whether the assessment arose from an unauthorised fraudulent return or from SARS’s subsequent reconstruction of the tax position without supporting explanations.

We do not have all the facts. SARS may ultimately establish a proper basis for refusing the requests. But that would require an enquiry into the actual requirements of section 93(1)(e)(iii).

The possibility that SARS could have advanced a different reason does not make the reason it actually advanced correct. This case is another reminder that a refusal from SARS warrants scrutiny. Accepting its explanation simply because it comes from SARS can bring a potentially valid challenge to a premature end.

In our experience, SARS seldom grants reduced-assessment requests at the first attempt, and the reasons for refusing them often warrant scrutiny. Taxpayers need not simply accept those refusals. They can be challenged through the appropriate legal procedures. Further, as the recent Devland judgment illustrates, SARS cannot rely on a blanket claim of confidentiality to withhold the relevant decision-making record when its decision is taken on review.[4] Access to that record allows the taxpayer to test whether SARS’s explanation holds up, and whether the material before the decision-maker actually supports it.

References

[1] TEG Asset & Risk Management CC v CSARS, case no. 2023-110354, Gauteng Division, Johannesburg, 8 October 2026, particularly paragraphs 15–19 and 25–30.

[2] The analysis of section 93(1)(e)’s purpose and the distinction between a fraudulent return and a subsequent audit assessment draws on N Theron and C Louw, Practical Guide to Handling Tax Disputes (LexisNexis, 2024), and the author’s updated discussion supplied for this article.

[3] Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2015, paragraphs 2.49–2.50.

[4] Devland Cash and Carry (Pty) Ltd v CSARS (5837/2020) [2026] ZAGPJHC 967 (28 August 2026), particularly paragraphs 42–55.