If SARS did something a taxpayer is aggrieved by, the taxpayer has limited time within which to take action. The general rule is, when it comes to a dispute between a taxpayer and SARS involving an assessment, that limited period is 30 days (at the time of drafting this article, there is a proposal by SARS for the period to be extended to 60 days). If the taxpayer misses the 30-day period (or soon, possibly 60-day period) by more than 30 days (but less than three years), SARS can only consider the grievance/objection if the taxpayer can demonstrate to SARS that there were exceptional circumstances for missing the first 30-day period. It is evident, however, from recent case law on this point that proving exceptional circumstances is, well, exceptionally difficult.
The 30-day period (soon to be 60-days) is often missed by the frustration of taxpayers especially where the decision or assessment by SARS is the result of the incorrect completion of a tax return. Stated differently, SARS assesses a taxpayer to a larger amount than what is due, as a result of an incorrectly completed tax return and an objection is not lodged in time. What then? Should the taxpayer simply accept the additional tax liability?
A recent judgment from the High Courtserve as a reminder that there is no need to throw in the towel provided the assessment is not older than 3 years. In this particular case, the taxpayer made certain transfer pricing adjustments in its tax return, ostensibly resulting in a higher than necessary tax liability being assessed by SARS. The mistake was only identified after the relevant objection time periods lapsed but before 3 years had lapsed.
The taxpayer, as opposed to trying to convince SARS that there were exceptional circumstances that warrant SARS’ entertainment of an objection and dispute resolution process, relied on another remedy. This remedy allows SARS to rectify an assessment in the absence of an objection but only where there is an undisputed error in a return by the taxpayer and the assessment has not prescribed. SARS, in this case, naturally, disputed the fact that the taxpayer made a mistake in a return and informed the taxpayer that it will not rectify the assessment. A dispute is born. The taxpayer, not being satisfied with this response from SARS, approached the court.
Interestingly, the issue placed before the court is whether the transfer pricing adjustment was in fact required under law or not – i.e. the court had to determine whether or not there was a mistake in the return or not. The issue before the court was therefore not whether there is a dispute as to the existence of a mistake, the mere existence of which would arguably, before this judgment, have meant that the remedy relied on by the taxpayer was simply no longer available.
In short, it follows, in our view, from this judgment that if a taxpayer makes a mistake in a return and it is only identified after the objection periods have lapsed (but before 3 years have lapsed), the taxpayer is not without remedy even if SARS disputes the fact that the assessment is wrong because of a mistake in the return. Where handheld correctly, all will not be lost and the problem can still be fixed.
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Author: N Theron
 Crookes Brothers V Commissioner for The South African Revenue Service 14179/17