What is worse than paying tax? – Being involved in a dispute about your tax.
Since a dispute has a negative connotation attached to it, it is essential to settle the dispute in the most time and cost-efficient manner.
Alternative Dispute Resolution (ADR) may be the solution.
You might have heard the term in the context of non-tax areas of law, but this is a process that should be ranked highly, and rightfully so.
ADR is a form of dispute resolution other than litigation or adjudication through the courts. It is less formal, less cumbersome and less adversarial, and a speedier process of resolving a dispute with SARS. ADR seeks to resolve the dispute through an agreement or a settlement. An agreement is when either SARS or the taxpayer accepts the other party’s interpretation of the facts or applicable law and is preferred over a settlement.
A taxpayer or SARS can initiate ADR.
You can represent yourself or your tax advisor. Whereas an impartial official will represent SARS, i.e. an official who was not part of the process leading up to the dispute, such as the audit or assessment of the said taxpayer.
ADR must be concluded within 90 days after the commencement of the ADR – which again supports the time effective arguments since disputes following the normal route have multiple correspondence dates, which cumulatively add up to months.
A facilitator is appointed as the mediator and sits as the neutral party to resolve or settle the dispute at hand.
Only once the parties (SARS and the taxpayer) agree to use a facilitator for the ADR proceedings will one be appointed. A party-to-party negotiation basis may also be taken when the parties agree that they are able to conduct the ADR proceedings amicably without the assistance of a facilitator.
Where an agreement or a settlement is concluded, SARS must issue an assessment to give effect to that agreement or settlement, as the case may be, within a period of 45 days after the date of the last signature of the settlement.
So yes, dear taxpayer, you may be delighted to hear that there is an alternative to your disposal for tax disputes as opposed to taking SARS to court.
As a closing note: should your ADR be unsuccessful, you as a taxpayer still have the option to appeal to have the dispute heard before the tax board or a court of law.
What follows from the above is thus that the taxpayer merely needs to indicate its willingness to have the matter resolved by way of ADR.