Tax Controversy and Dispute Resolution

Overview

Our Tax Controversy and Dispute Resolution (TCDR) network assists taxpayers with an array of tax advice in a variety of industries. Our tax specialists help local and global clients with tax audits/disputes across all tax types, including corporate tax, personal income tax, employees’ tax, dividends tax and value-added tax. Our deep technical understanding, local knowledge, strong relationships and tax litigation experience combine with a global dispute resolution network to provide you with unrivalled service.

The TCDR team comprises experienced attorneys and accountants, which helps to ensure an all-round understanding of matters.

We assist and support taxpayers right from the initial query stage, through to managing the tax audit, providing opinions, and dispute resolution. We can also assist with voluntary disclosure programme (VDP) applications, requests for refunds from the South African Revenue Service (SARS), managing the payment of tax debt due by taxpayers, i.e. the settlement of disputes, representation at an alternative dispute resolution hearing, and requests for advanced tax rulings.

Tax Controversy and Dispute Resolution - Africa Insight Series May 2021

This seminal publication from PwC’s Tax Controversy & Dispute Resolution Team aims to bring businesses and taxpayers up to date with landmark tax decisions.

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Taxing Times Survey

Download the sixth edition of PwC’s Annual Taxing Times 2023 Survey Report for a comprehensive analysis and commentary on this year’s survey results.

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Issues you may be facing

Liaising with SARS on a preventative basis, such as assisting clients with tax strategy/opinions, advanced tax rulings, binding rulings as well as voluntary disclosure applications (regularising tax affairs of clients)
Managing tax audits (end-to-end)
Assisting with tax disputes with SARS, i.e. objections and appeals
Unlocking a refund owed by SARS
Suspending the payment of a tax debt pending the resolution of a dispute with SARS
Resolving a dispute with SARS – settlements and compromise
Obtaining deferral arrangements
Obtaining tax clearance certificates

How we can add value

Proactive measures – tax strategy
Voluntary Disclosure Programme (VDP)
Dealing with SARS audits
Managing outstanding tax debt with SARS
Dealing with SARS post-COVID-19

Proactive measures – tax strategy

Liaising with SARS unaided does not always yield the desired result. Our TCDR team can assist with various aspects of tax strategy, tax administration and tax dispute resolution. Due to our diverse team of accountants and attorneys, we are well placed to deliberate and determine the correct strategy and the appropriate way forward in not only submitting the correct tax position to SARS but also assisting taxpayer to defending a tax position. We can assist by drafting tax practitioner opinions (which can assist in mitigate certain penalties), advanced tax rulings (private or class), binding general rulings as well as requesting advanced VDP non-binding rulings.

When a SARS audit commences, our team of experts are also well placed to assist with not only the merits of the query but also the tax administrative provisions. It has proven very useful to clients to understand their rights and obligations when dealing with SARS.

Ultimately, if a disagreement with an assessment does arise, we can assist by drafting requests for reasons to enable a precise understanding of the basis of assessment as well as grounds of objection and later (should it be required) assist in drafting the grounds of appeal. Where matters are appropriate for resolution at ADR, the TCDR team will represent your matter and assist to ultimately achieve the best possible outcome.

Our team is also able to liaise with SARS’ Debt Management department to request suspensions of payment of the disputed tax debt pending the resolution of the dispute, should it be required. We also assist with applications for remittance of penalty and interest imposed as well as other assist with other SARS decisions such as refusal to grant extension for filing information (extension of time) as well as refusal to grant condonation for late filing of an objection or appeal.

Voluntary Disclosure Programme (VDP)

The VDP encourages taxpayers to come forward voluntarily to declare any default/s made by a taxpayer, thereby regularising their tax affairs. TCDR has helped numerous taxpayers to compile applications that meet the required criteria and thereby avoid imposition of understatement penalties and administrative penalties as well as criminal prosecution.

The TCDR team can assist with drafting the VDP application, performing the necessary tax calculations, lodging the application on SARS’ e-filing system, completing the revised tax returns and reviewing the VDP agreement provided by SARS.

The PwC TDCR team of experts understands the nuances in respect of VDP applications and can advise whether the VDP process is the correct mechanism to regularise a client’s tax affairs.

Dealing with SARS audits

Being audited by SARS can, in some instances, be unnerving and protracted. During the audit process, SARS often requests the taxpayer to produce relevant material in connection with their audit. There are, however, various factors to consider before responding to a request for relevant material. The TCDR team can assist with determining the most appropriate mechanism to be used, depending on whether information requested is subject to legal privilege, the request is made with reasonable specificity, if document retention requirements apply and whether the request constitutes a fishing expedition by SARS. Further, it is important for taxpayers to understand their rights and obligations, for example, SARS is required to request specific information as well as issue progress reports in respect of an audit. Our team can assist with navigating these intricacies of SARS audits.

One of the implications of an audit, is that it can impact the tax compliance status (TCS) of an individual or entity. A taxpayer’s TCS is withdrawn in two instances: 1) when there is an outstanding return and/or 2) when there is an outstanding tax debt. This can affect a taxpayer’s ability to continue business activities. The TCDR team can assist you with applying for TCS alternatively, we can help with rectifying the reason for the non-issuance of a TCS.

Managing outstanding tax debt with SARS

In trying economic times, one way for taxpayers to manage the payment of their tax debts to SARS, is by entering into an instalment payment agreement, where a taxpayer can demonstrate a short-term cash flow problem and that they are unable to settle their tax debt in one payment. The TDCR team can assist by drafting a formal request for an instalment payment agreement. Other mechanisms to manage the payment of tax debts include entering into a settlement agreement with SARS (for disputed debt), alternatively a compromise agreement (for undisputed debts).

Our team can also assist with negotiations in this regard and the drafting of the relevant applications for submission to SARS. Where a taxpayer disputes an assessment, the TAA empowers SARS to enforce the ‘pay now argue later’ rule. However, the TAA also allows taxpayers to suspend the collection of taxes by SARS in limited instances. Our TCDR team can assist taxpayers to apply for such suspensions of payment.

We have practical experience with dealing with SARS’ Debt Management department and can assist clients in understanding their options when dealing with tax debt.

Dealing with SARS post-COVID-19

The COVID-19 pandemic has affected many taxpayers on many levels. The outbreak resulted in the large-scale disruption of work due to illness, self-isolation or quarantine. The impact on employment has been severe as businesses have had to grapple with the impact of reduced demand, disrupted business operations and a large portion of the workforce being unable to present themselves for duty. South Africa is experiencing unprecedented economic strain that has left many taxpayer’s in financial distress. Between April and May 2020, SARS announced various tax relief measures relating to, inter alia, employee tax incentives, employee tax deferrals and provisional tax deferrals to alleviate the cash flow burdens of taxpayers. The TCDR team has swiftly grasped the mechanics of the tax relief measures and can assist and support clients with their tax related queries and suggest possible options to gain tax relief.