Tax and SARS knowledge base
Can a company use ADR after a SARS objection fails?
Can a company use Alternative Dispute Resolution after SARS disallows an objection?
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Direct answer
Yes, potentially. SARS says that if a taxpayer disagrees with the outcome of an objection, it may appeal to the tax board or tax court. After submission of a valid appeal, SARS and the taxpayer may, by mutual agreement, attempt to resolve the appeal through Alternative Dispute Resolution, or ADR.
ADR is not automatic. The taxpayer must indicate in the notice of appeal whether it wishes to use ADR, and the process operates under the applicable dispute rules. It should be considered as part of a properly prepared appeal, not as a substitute for meeting appeal requirements.
What this means in practice
The normal sequence matters. First determine that the company received a decision that may be objected to and appealed. Then preserve the original assessment or decision, the objection, the supporting documents, the SARS objection outcome and the date on which the outcome was issued. A missed appeal deadline can affect the available routes.
An appeal needs to explain why the company disagrees with the objection decision. SARS says the notice of appeal must identify which objection grounds are being taken on appeal, state the appeal grounds, provide substantiating documents and identify any further appeal ground that does not amount to a new objection. The company should not treat ADR as a chance to introduce a wholly new objection after the fact.
ADR creates a structured opportunity to resolve an appeal by agreement or settlement rather than immediately going to court. SARS describes it as less formal and potentially less costly than court. It is still a serious tax process: the company needs a clear fact file, a supportable technical position and decision-makers who understand the commercial and tax consequences of any proposed settlement.
Step-by-step
- Read the objection outcome closely.
Identify every issue allowed, partially allowed or disallowed by SARS. Record the date of the notice, the assessment or decision number, amount in dispute and the reasons SARS gives. Match each issue back to the notice of objection and supporting documents.
- Protect the appeal deadline.
Check the current SARS rules and the notice for the prescribed period. If a valid extension request may be needed, obtain advice before the time expires. Do not delay an appeal because an informal conversation or complaint is pending.
- Prepare a focused appeal.
Identify the original objection grounds that remain in dispute. Set out the factual and legal basis for each one, attach clear supporting documents and reconcile the amounts. Keep the appeal concise but complete. An appeal is not strengthened by sending large volumes of unindexed material.
- Elect ADR in the notice of appeal if it is appropriate.
SARS says the taxpayer indicates whether it wishes to make use of ADR in the Notice of Appeal. Make that election deliberately, after considering the nature of the dispute, evidence, time pressure and settlement authority. Keep the submitted appeal and proof of filing.
- Monitor SARS communications and prepare for the process.
SARS may issue notices about whether a matter is suitable for ADR and about the outcome. Maintain a chronology, a document bundle and a list of company representatives with authority to participate. Do not assume that an ADR discussion changes the assessment until an outcome or agreement is formally implemented.
- Document any resolution.
If an agreement or settlement is reached, obtain it in writing and check what assessment or payment steps follow. SARS says it endeavours to issue an assessment giving effect to an ADR agreement or settlement within 45 business days after the last signature. Retain the agreement, assessment and proof of payment.
Documents and records to keep
Keep the assessment or decision, notice of objection, objection outcome, notice of appeal, filing confirmation, correspondence, evidence bundle, ADR notices and any agreement. Maintain a calculation showing the amount at issue for each ground and a record of the authority given to directors, employees or advisers.
Important limits and exceptions
ADR is available after submission of a valid appeal and by mutual agreement. It is not compulsory for all appeals, does not guarantee a settlement and does not make an otherwise invalid appeal valid. SARS may consider whether the matter is appropriate for ADR under the rules.
This article does not decide whether a company should settle, appeal to the tax board or proceed to the tax court. Do not confuse a complaint about SARS service with an objection and appeal against an assessment or decision.
When to get tailored advice
Get tax-dispute advice before appealing a material assessment, electing ADR, accepting any settlement language or making representations on a complex issue. Legal advice is especially important for transfer pricing, cross-border tax, penalties, fraud allegations, a precedent-sensitive issue or a substantial payment amount.
TaxProof can help organise the evidence and appeal chronology. We cannot advise on settlement terms or determine the merits of an appeal without the complete case file.