On 4 June 2025, the SCA ruled[1] that SARS is not required to request condonation if they remedy their default within the 15-day notice period contemplated in rule 56(1) of the Tax Court Rules (“the rules”) gazetted under section 103 of the Tax Administration Act 2011 (“the TAA”).
What this means, practically speaking, is that SARS can take as long as they like, regardless of the prescribed time-period in the rules and then effectively “get away” with a time breach by simply responding in time to a taxpayer’s default judgment threat. Allow to explain by way of example:
SARS is required, in terms of the rules, to decide on an objection within 60 business days from the date the taxpayer delivers his objection (exceptions to that period aside). If SARS does not comply with this 60-day period and the taxpayer does nothing about it, nothing will happen to SARS. In fact, SARS can effectively “sit on the objection” (or to use the words of the SCA, SARS can “play possum”) for years and if a taxpayer then delivers default judgment notice, they will, without more, have another 15 days from the date of that notice to deliver an outcome without having to explain their breach. This, according to the SCA, is exactly how the rules were designed.
It is in light hereof that the SCA in fact tells taxpayers to “be vigilant”, meaning, on my reading of the judgment, taxpayers must ensure they keep SARS in check and indeed suggests that taxpayers should not delay delivery of their rule 56 default notices.
In practice, taxpayers (or their advisors) tend to delay the delivery of rule 56 notices, often to try and “amicably resolve the dispute” or because delivery thereof may be construed as being “too aggressive”. This judgment by the SCA points out that this is a terrible idea and rather suggests an immediate delivery of a default notice as soon as SARS is in breach of the rules.
The judgment also highlights the importance of knowing what the dispute resolution rules are, what the time periods are and what SARS’ obligations are (which you can learn from The Practical Guide To Handling Tax Disputes and the Tax Dispute Application). Failing that, taxpayers will not be able to keep SARS in check and if you think SARS will always keep themselves in check, think again (at least, that’s my experience).
To be fair, the rule cuts both ways: the same principle should apply to taxpayers. For example, if a taxpayer fails to deliver a rule 32 notice for more than 45 days after delivery by SARS of its rule 31 statement, then delivery by the taxpayer after SARS’ rule 56 default judgment threat will relieve the taxpayer of the obligation to apply for condonation as long as the taxpayer responds to the default notice in the 15 day time period.
The judgment does make one wonder though: should taxpayers deliver a rule 56 notice at all when SARS is in breach of the rules? You see, getting condonation is not always that simple, straightforward or easy (neither is getting final relief on default, to be fair). If, for example, a taxpayer does not grant SARS an extension to a prescribed time period for the filing of their rule 31 statement and does not deliver default judgment notice under rule 56(1), it does not mean SARS is not required to deliver their rule 31 statement. What it does mean, though, is that they will have to apply for condonation eventually. One might think that this approach may result in a stalemate with SARS just not delivering their rule 31 statement. Indeed, in theory, that might happen but eventually they will have to explain their delay and just not delivering it in a strategic attempt to force a rule 56 notice by the taxpayer to escape the need to apply for condonation will hardly present well in a condonation application.
Undertaking a dispute against SARS is no easy task. Not only because SARS are vigorously defending their assessments (no doubt because of pressure being placed on SARS to collect) but also because it requires both a thorough knowledge of the tax dispute procedural and substantive law and an experienced, strategic professional. Unicus Tax Specialists SA specialises in tax dispute resolution and boasts a 100% success rate in tax objections and appeals.
[1] Commissioner for the South African Revenue Service v Virgin Mobile South Africa (Pty) Ltd (1303/2023) [2025] ZASCA 77 (04 June 2025)
