Warning to South African taxpayers

Experts urged taxpayers facing delayed VAT refunds and silent verifications from SARS to consider taking legal action, as systemic failures and a lack of communication are leading to unjust penalties, reversed refunds, and aggressive collections.

André Daniels, Head of Tax Controversy & Dispute Resolution at Tax Consulting SA, urged these taxpayers to take legal action.

“Taxpayers and tax practitioners alike are reporting a surge in delayed refunds, with SARS citing pending verifications or audits, but only after a manual status check is performed,” Daniels said.

“This is not a procedural glitch – this is a systemic failure with serious financial implications. In many recent cases, SARS has requested further verification documentation without issuing any formal notification through eFiling or on email.”

Making matters worse, there is often no link available to upload the required documents because no verification or audit letter was ever generated.

“Taxpayers are unknowingly rendered non-compliant – setting the stage for SARS to disallow input VAT, impose penalties and interest, and even initiate collection steps.”

“Even in instances where the link is provided and documentation uploaded, additional assessments are subsequently issued with the reason of ‘burden of proof not discharged’.”

Daniels urged taxpayers not to wait, even in cases where seemingly has not put you through the verification or audit process.

The same is also true where SARS alleges that the burden of proof was not discharged, despite supporting documents being uploaded, the message is clear.

“Follow up proactively and confirm whether any verifications or audits have been raised behind the scenes, and use the dispute resolution steps to correct assessments where appropriate.”

Daniels explained that these issues are not isolated. Registered representative updates are stuck in limbo for weeks, often being rejected on dubious grounds.

VAT refunds are also being reversed, in some instances, years after being verified and paid out. Call centres have become virtually unreachable, with some taxpayers reporting being on hold for up to six hours.

Worse yet, physical appointments at SARS branches are booked out for up to two months, leaving both taxpayers and practitioners with nowhere to turn.

SARS is coming after taxpayers

With little to no communication, Daniels said that SARS continues invoking its broad collection powers – often appointing third parties, like your bank, to settle alleged tax debts.

“When internal systems collapse, the balance of power shifts disproportionately in SARS’ favour, leaving taxpayers with no recourse but to fight back after the fact.”

At the same time, SARS has been equipped with more resources than ever to collect taxes. With the VAT rate increase scrap in the May Budget, SARS was allocated an additional R4 billion to support its revenue-raising exercise.

This equates to R7.5 billion allocated to the taxman since October 2024, Momentum Investment’s Sanisha Packirisamy and Tshiamo Masike said.

They explained that the original R3.5 billion allocation will be used for operational and capital expenditure projects to modernise SARS.

With this increased capacity, the taxman is expected to increase debt collection and collections from illicit trade by between R20 billion and R50 billion every year, with Godongwana noting that R35 billion is feasible.

“Treasury will be closely monitoring cash collected from debt every month to assess whether this potential revenue should be included in its revenue estimates,” they said.

The implication is that while there may be systematic difficulties at SARS, the taxman’s additional need to boost revenue may put taxpayers at greater risk of coming under fire from SARS.

Daniels urged taxpayers affected by these systematic problems to take action against the taxman. “A legal strategy backed by a skilled tax attorney is no longer a luxury – it’s a necessity.”

This is not only to help you stay compliant but also to ensure SARS is held accountable within the legislative safeguards and prescribed timeframes designed to protect taxpayers.

“When SARS fails to notify you of verification requests or breaches these deadlines, legal intervention becomes essential.”

“This includes initiating formal dispute resolution processes and applying for a suspension of payment to prevent unlawful collections.”

The current climate has overwhelmed many tax practitioners, battling SARS on every front while fielding frustrated calls from their clients.

“The burden shouldn’t fall on you alone. A legal strategy backed by a skilled tax attorney is no longer optional. It’s a critical requirement.”