A proposed change to the Tax Administration Act (TAA) is getting taxpayers – particularly those embroiled in legal disputes with SARS – hot under the collar, suggests a Moneyweb report.

It says SARS wants to be able to recover fees and costs from taxpayers if it uses in-house legal counsel and wins against a taxpayer in the higher courts. 

However, this ability to recover costs will not be extended to taxpayers using their in-house legal practitioners.

The courts include the High Court, the SCA and the Constitutional Court.

It is also proposed that the TAA be further amended to provide that cost awards by the tax court (where SARS uses in-house legal counsel) be determined in accordance with the dispute resolution rules.

Amendments will be introduced to the dispute resolution rules to make provision for specific fees in these instances. Again, this is not extended to taxpayers who use their in-house legal counsel.

David Warneke, a tax partner at BDO, questions the proposed changes.

According to Moneyweb, he said during a recent webinar that there exists a precedent for the recovery of costs by the State Attorney. However, he does not see why SARS should be permitted to recover its own internal legal costs in tax matters from the taxpayer where the taxpayer is not able to avail of the same benefit.

He adds that taxpayers would generally not be able to use their in-house legal counsel to appear on their behalf in the higher courts in tax matters, even if the taxpayer employs legal practitioners (advocates and attorneys). 

They do not have an automatic right of appearance.

However, the TAA specifically affords senior SARS officials who are legal practitioners the right of appearance in terms of section 12 of the Act.

Warneke says it would be fairer if the TAA was amended to allow in-house attorneys (for both SARS and taxpayers) the right of appearance when there are disputes between SARS and taxpayers in the higher courts.

Full Moneyweb report