SARS taking South Africans to court and winning 83% of its cases

The South African Revenue Service (SARS) is taking a tougher and more strategic approach to tax disputes, with the taxman now winning 83% of court cases.

This is according to Unicus Tax Specialists founder Nico Theron, who said SARS has become a more formidable opponent in tax disputes.

Once the taxman raises an assessment, it is prepared to dig in and defend its position. SARS is also applying the country’s tax legislation more strategically to gain an advantage.

This means taxpayers need to be more accurate, strategic, and tenacious than ever when challenging an assessment.

“SARS is much more inclined to push matters into litigation to make their assessments stick,” Theron explained.

Modern tax disputes in South Africa reflect a combination of SARS’s greater efficiency, mounting pressure to collect revenue, and increasingly complex, legally nuanced interpretations of tax law.

Theron said the biggest mistake taxpayers make is treating a dispute as a compliance issue, since the two are distinct legal processes.

According to SARS’s 2024/25 annual report, the revenue service achieved an 83% success rate in tax disputes that reached litigation.

For taxpayers, this figure shows the importance of handling a dispute correctly and strategically from the outset, rather than waiting until the matter reaches the courts.

“It is becoming inappropriate for professionals responsible for managing day-to-day compliance to also handle disputes, given that disputes are becoming more complex, legally nuanced, and strategic,” Theron said.

“Once an issue arises, the taxpayer must concern himself with the details before it becomes a mess where one tries to ‘salvage an unsalvageable case’.”

What taxpayers should do

Theron stressed that once a liability is raised, it directly affects a taxpayer’s compliance status and must be addressed immediately.

Tax risks can have broader business and governance consequences – they are not merely financial or compliance issues.

“Hence the importance of treating an audit and subsequent assessment with which you disagree as a dispute from the start, even if an objection has not yet been lodged,” he said.

Correspondence from SARS matters. SARS can, and does, make mistakes. Doing nothing or waiting too long to respond can leave taxpayers worse off.

Theron advised taxpayers challenging the taxman’s position to define their defence carefully. Too often, they focus narrowly on the immediate issue without considering the wider implications of the dispute.

If the defence is framed broadly, it gives the tax specialist room to present the matter from multiple angles.

“I understand that taxpayers want finality, and it can be frustrating to deal with an audit. The tendency is to underplay the response to the letter of audit findings,” he said.

However, if the letter is given careful consideration, Theron explained that it can help avoid a dispute.

It takes discipline and knowledge of tax legislation, the objection and dispute process and case law, to address the matters raised by SARS in the audit findings.

The response must be strategic and detailed, as frustrating as it might be, he added. “Pay heed to the questions, understand what Sars wants to achieve with a question.”

SARS rarely asks a question if it does not already have an answer. Theron also advised taxpayers not to give in when there is pushback from SARS.

The tax authority can make mistakes. Strategy and technical know-how are what will get taxpayers over the line.