A taxpayer who is aggrieved by an assessment or decision of SARS against that taxpayer has the right to dispute that assessment or decision. If an original assessment has not been issued, SARS may request a taxpayer to submit an amended return to correct an undisputed error made in the prior return.
In the case where an assessment has already been issued, the dispute resolution rules in the Tax Administration Act provides the legal framework to be followed by both SARS and the taxpayer to resolve any disputes. Section 93(1)(d) of the Tax Administration Act provides an alternative to the dispute resolution process allowing taxpayers a less formal mechanism to request corrections to their assessments if certain requirements are met, without having to follow the objection process. Section 93(1)(d) contains the requirement that the error either in an assessment by SARS or in a return by a taxpayer must be “readily apparent” and not just “apparent”.
The determination of what constitutes a “readily apparent undisputed error” to the satisfaction of SARS is of importance for the following reasons:
- It determines whether the taxpayer is entitled to request a correction for a reduced assessment under section 93(1)(d) or whether the taxpayer must follow the objection and appeal route; and
- It ensures consistency in the interpretation and application of section 93(1)(d) by both SARS and taxpayers.
Section 93(1)(d) can only be applied if all the requirements are satisfied. It entails a factual enquiry and will be based on the specific facts of each request. It is important to note that section 93(1)(d) does not replace the dispute resolution process but offers a less formal mechanism and is also cost effective in resolving disputes of errors that are readily apparent. It is applied only in limited circumstances where all the requirements are met.
In applying the ordinary meaning of the words “readily apparent” it is established that the error must be clearly visible, must be identified without hesitation or difficulty, and such error must be either in the return or the assessment. At the first glance of the request, SARS must be able to easily determine that there is an undisputed error. The presence of any doubt will disqualify the taxpayer’s request for a reduced assessment under section 93(1)(d). Therefore, it may be said that the error must be an obvious, unquestionable mistake. If SARS cannot make this determination from merely looking at the return or assessment, the error cannot be said to be readily apparent although there might well be an error.
The error must, therefore, not be questioned or disputed and must be accepted by SARS. An error may be undisputed if the facts submitted by the taxpayer are proved to be correct, but at the same time may also not be “readily apparent”, since to prove the error may involve a high-degree process of verifying the error, and may even require a desk or field audit. The confirmation of the error should require no more than a simple verification and not be of an interpretational nature, for example, interpreting a statutory provision of a Tax Act, a contract, or a tax treaty. A factual dispute of the error will disqualify the request under section 93(1)(d).
The burden of proof lies with the taxpayer and must satisfy SARS that a readily apparent undisputed error was made by SARS in an assessment or a taxpayer in a return. The omission of information in a return by a taxpayer does not, therefore, fall within the ambit of section 93(1)(d).
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).
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