Sars cannot renege on tax settlements, High Court rules in taxpayer's favour

THE High Court has recently handed down a decisive judgment in Inhlakanipho Consultants (Pty) Ltd v Commissioner for SARS, offering crucial assurance to taxpayers who have relied on, and continue to rely on, negotiated outcomes with Sars. The Court confirmed that once a settlement agreement is lawfully concluded under the Tax Administration Act, No. 28 of 2011 (“the TAA”), SARS is bound to its terms. Further, Sars cannot, at a later stage, alter its position on the basis of administrative difficulty or internal processes.

- ANDRE DANIELS and RICHAN SCHWELLNUS

IN A groundbreaking judgment, the High Court has ruled that Sars must honour final settlement agreements with taxpayers, regardless of administrative challenges. This landmark case sets a crucial precedent for taxpayers in disputes with revenue authorities and highlights the importance of professional representation in tax matters. | FILE

Dispute background

Following a series of VAT assessments and partial objection outcomes, the parties resolved the remaining issues through alternative dispute resolution. A written settlement agreement was signed in 2018, which recorded a final liability of just over RS.9 million. The taxpayer complied fully and tendered payment within the timeframe agreed with Sars.

Despite this, Sars later asserted that the payment did not discharge the agreed liability and instead applied it toward older debts in line with section 166 of the TAA, effectively reviving the very amounts the agreement sought to resolve.

Court rejects Sars reliance on internal systems