Speaker 1: Right, part two, starting the dispute process. I've got on the screen there some extracts from an original assessment and a reduced assessment that was issued there. You asked why I object to a reduced assessment, we're still not happy with that, there were some questions that were asked and we answered, and the new e-filing system has a drop-down menu for disputes, I didn't include print screens of all of that, but there is a process that follows that thing for us. Okay, so let's look at starting this dispute process. So we now have a taxpayer that is agreed with an assessment as we said in part one, and we now want to sort this dispute process. Remember in the previous session, we said that we want to sort this dispute process. Remember in the previous session, we said that we want to sort this dispute process. In the previous session I also said that we've got those yellow call-out things with numbers in them, refer to the rules of dispute resolution , and then dispute , request for reason . Those are the ones that we want to deal with. I believe that the first step actually is dealing with tax debt. We have in South Africa, the spade-nor-arguulator principle. And if you do not, you're going to have problems. make any arrangement, then the principle is you've got to pay SARS. At the moment there is an assessment and they've indicated the day by which payment must be made. Judspin's Ward in one of the Steinhoff cases, so Steinhoff also just helped a little bit with our tax law, says the considerations underpinning the pay now argue later concept include the public interest in obtaining full and speedy settlement of tax debt. So it's South Africa's interest that we pay our tax debts in time. But also a need to limit the ability of recalcitrant taxpayers to use objection and appeal process strategically to defer payment of their taxes. So if you say hey, there's that advert, you get this telephone account of a million rand and the other side of the phone say please pay, we'll refund you if we later fix up the error. I mean, jeez, we'll get to that if you can't afford to pay that. The judge said if you've got an assessment you must pay. That is the pay now argue later principle and that's why section 164.1 states that unless a senior source official otherwise directs the obligation to pay tax and sources the right to demand repayment of the tax is not suspended by an objection or appeal or pending a decision of the court, etc. So that's the principle at law and our constitution, this was tested in the constitution, Metro Cash and Carry case pay now argue later. Right. So, but the act, and this follows from that Metro Carry Cash case and we've seen that subsequently as well in some other cases come through. If that is absolutely, you know, that million rand where you really should owe them nothing more than three or four hundred rand, you can't force the taxpayer to make payment if it's absolutely absurd, right? So therefore the act allows for the taxpayer to request SARS and now the request is, directed at the senior source official to suspend payment of tax or a portion thereof. So you say, look, I've got this million rand account, I owe you three hundred rand, I'll pay you three hundred rand, but let's dispute the rest. And if the taxpayer intends to dispute, or disputes the liability to pay that tax under chapter nine. So the law recognises that, pay now argue later, but if the debt is in dispute, the tax debt, and that would mean if I'm aggrieved with the assessment, it would be, I must be able to request payment. So that's where suspension of the debt and all I need to prove is that I intend to dispute and we find that SARS says, but where's your dispute? So in practice, we find that when you put in a request for payment, you actually say, but I've already lodged my objection. That sort of seems to make it easier to happen. Section 164 then says, if payment of tax was suspended and remember, Judge Burns Ward referred to this recalcitrant taxpayer. If you then do not lodge an objection, this confirms that I'm merely, intend to object, or the objection is disallowed and you don't proceed with an appeal or the appeal is unsuccessful, and unsuccessful, you now not go to a High Court or the Supreme Court of Appeal. I'll explain all of that later this morning. The suspension is revoked with immediate effect from the date of expiry of the relevant prescribed time period or any extension of the related time period under this act. So we've got the scenario, an assessment issued by SARS, taxpayers agrees with assessment. Taxpayer wants to dispute that. First step, request suspension of payment. Make certain that we are not caught by SARS officials phoning and say, when are you going to pay today? You need to have some official document in that request suspension of payment. And actually the e-filing system allows for that now. So you can do the request for suspension of payment through e-filing. If it's not available on e-filing, is that if I, not if, which I understand often is not there, and that's normally when we are to and froing in the dispute process, that you will then have to lodge a formal request by way of a letter to SARS, because it's not available on the e-filing system. You've got to do it another way. And of course other taxes, it will not be on e-filing and you'll do the request there. But critical, first step, take the pressure off the taxpayer by requesting suspension of payment. You are hoping that you'll resolve this and the tax will disappear or at least part of it will disappear. So do not make the payment to SARS. You not don't have to do that. You can request suspension of payment from SARS. And it's not the forum to discuss that, but section 164 and as it follows on is quite clear in how this process and what is required to do that. Now, I said that in all objections, I request reasons for this section. The assessment first before I go any further. So any additional assessment issued by SARS following a verification audit is probably issued under section 95 of the Tax Administration Act. In part one, I dealt with that. And this is principally where you haven't provided documents or SARS are not happy with the answers you provided. And then they change what, remember, the process is we submit the return to SARS based on the information that we have. It's through reflection of the thing. SARS now issues an additional assessment based on other information that generally happens under section 95, which allows SARS to make an original additional reduced based assessment based in how long part on an estimate. If the taxpayer submits a return on information that's incorrect or inadequate. Now, section 96 deals with assessments. And it says in addition to that assessment, SARS must give the person assessed in respect of this estimated assessment, section 95 deals with estimated assessments, must give the, if it's not fully based on the returns submitted by the taxpayer, a statement of grounds for the assessment. So let me repeat that because I find this is very important to understand. I've submitted the return, I've declared income information in that return, income and expenses. SARS had done some work, issued an additional assessment. This is not based on what I've put in the return. This is subsequent information. That they've received. Now they must give me a statement of the ground for the assessment. In our letter of audit finding, we refer to that as proposed grounds for the assessment. Remember the SARS letter of audit finding in part one that we dealt with. We need a statement of the ground for the assessment. If it's a jeopardy assessment, of course, why they think the tax is in jeopardy, but we're not dealing with that. So for us section 96 is the important part. Okay, so let's just look at some of the examples of grounds on an assessment. So the law requires of SARS, this is an additional assessment, 93A you see, notice of assessment, but there we see the type of assessment, not original, but additional. And then they say assessment based on information available to SARS. Wow, thanks for telling us. Then they give some further things there. Net employment income, corrected. But, you know, does that work for you? This is one. Additional assessment. As you can see, this year, but it was issued to the 2017 year. Now, a couple of months ago, in fact, exactly a month ago when I'm doing this, they say refer to manual letter. Grounds for the assessment. Adjustment reason referred to manual letter. Value added tax. This one, I hate it when I see this. Burden of proof not discharged. Invalid tax invoice. For me, that's the only reason. Your invoice doesn't meet that. Burden of proof. Probably convinced, like it was in the jazz festival case, SARS, that whatever we've got is sufficient there, right? But okay, invalid assessment. Burden of proof not discharged. Wow, that reason must be more specific for me. So, as is evident from these examples, the grounds of assessments are generally not informative enough. And for me, that's a big problem. And I understand that, you know, the way SARS present this to us, because if you look at the test results of the IT34, that they may not have enough space to put it all in there. And then, I agree that they can refer to the letter, to some other manual letter. Just look at what it's, their own guide state. SARS, so they refer to section 96. SARS must in the case of an assessment described in 95. That's that, you know, insufficient information. Not fully based on the returns admitted by the taxpayer. And it shouldn't be an or there, but issue a statement of the grounds of assessment. So that's what the law requires. Grounds here generally mean SARS must provide the grounds that enable the taxpayer to determine what has been decided, when, by whom, and what factual and legal basis that person had for doing so. And just shortly after this, SARS refers to that, judge Sponnen's decision in that Pretoria East case. Where he said, this is the only way you can fairly deal with the taxpayer. So this is a SARS guide that tells us that these grounds must be a little more than that one liner. You know, burden of proof not discharge. It should be noted that under our administrative law, grounds for a decision are generally not as extensive as reasons for the decision. I agree with SARS on that one. A lot of people don't, and I'll explain a little bit on that. Not all adverse decisions would be disputed. Thus, an obligation to provide adequate reasons with every decision would be to administratively burden some. Now, that's absolute nonsense. SARS is acting. They are issuing their grounds for that. But the reasons, yes, may be that I can say. So it's absolutely correct.