Clampdown on unsupported objections to tax assessments

A taxpayer recently learned an expensive lesson in tax court.

- Amanda Visser

The devil is certainly in the detail when objecting to an assessment raised by the South African Revenue Service (Sars).

The taxpayer's objection was not only invalidated twice by Sars, but the Western Cape Tax Court also dismissed with costs his application for a declaratory order that his invalidated objection was, in fact, valid.

The taxpayer, a specialist neurologist referred to as Dr X in the court papers, and his practice have a total tax and understatement penalty liability of more than R87 million.

Dr X came under scrutiny in 2021 when Sars audited his affairs and raised assessments for personal income tax, value-added tax (VAT) and donations tax spanning four years. The understatement penalties on VAT alone were R6.5 million.

Dr X's objections to the assessments were invalidated on the ground that they were in breach of Rule 7(2) of the tax court, which sets out the requirements for a valid objection.