Taxpayers face tougher SARS litigation in tax disputes

South African taxpayers should brace themselves for more aggressive tax litigation from the South African Revenue Service (SARS), according to Nico Theron, founder of Unicus Tax Specialists. Theron warns that SARS is becoming more willing to defend its assessments in court, pushing disputes towards litigation to make assessments stick.

With an 83% success rate in tax disputes that reach litigation in SARS's 2024/25 annual report, taxpayers are advised to act swiftly when they disagree with an assessment, treating the matter as a dispute from the start. This is crucial, for SARS is more likely to pursue litigation, making it imperative for taxpayers to distinguish between compliance issues and disputes, which have separate legal processes.

Acting quickly once SARS raises a liability is also essential, as tax risks can have wider consequences for businesses. Theron emphasizes that taxpayers should pay close attention to SARS correspondence and the letter of audit findings, as the tendency is to underplay the response to these documents. He also cautions taxpayers against giving up when SARS pushes back on their objections, as the tax authority may make mistakes, and tenacity, strategy, and technical know-how can lead to a favorable outcome.