It is the middle of South Africa’s tax season, with taxpayers filing their tax returns and some experiencing challenges with the revenue collector.
One of these challenges involves the South African Revenue Service (SARS) taking money from taxpayers’ bank accounts through a process called Third Party Appointment (TPA).
In many instances, this process is done correctly, but there are also times when SARS takes money without following proper procedures or takes more than the law permits, says the office of tax ombudsman.
The ombudsman pointed to a recent case in which it intervened, where SARS issued a TPA for an amount far above the amount that the taxpayer owed.
What was the tax complaint?
The complaint related to a request for SARS to reimburse R895,143 recovered from a taxpayer’s bank account through a Third Party Appointment.
This was over eight times more than the amounts reflected on Notices of Final Demand sent by SARS and resulted in financial difficulties for the taxpayer in running the business.
SARS issued final demand notices on 25 February 2021 and 11 March 2021 for R49,069.41 and R52,866.69, respectively.
After that, the revenue collector issued a TPA on 19 March 2021 to Absa Bank for R895,143, which was recovered from the taxpayer’s bank account on 26 March 2021.
“The amount recovered did not correspond with the amount due on the Notice of Final Demand dated 11 March 2021.
“Furthermore, in email correspondence on 30 March 2021, the taxpayer queried the R895,143 recovered by SARS and explaining the financial hardship the business was experiencing since an overdraft had to be requested from the bank as a result of SARS having taken more money than it should have,” the ombudsman said.
The ombudsman noted that the taxpayer had outstanding returns, debit and credit amounts in the VAT account but could not find any confirmation that the amount reflecting on the Third Party Appointment and paid to SARS was owed as a tax liability.
The ombudsman subsequently accepted the case on the basis that SARS appeared to have incorrectly issued the TPA.
What should happen?
The ombudsman recommended that SARS withdraw the Notice of Third Party Appointment issued for R895,143 and reimburse the taxpayer this amount since the Notice of Final Demand published on 11 March 2021 reflected R52,866.69, or to provide valid reasons for not doing so.
What was the outcome?
The ombudsman said that its intervention secured the return of R895,143 into the taxpayer’s bank account.