Recent case law is sending a clear message: SARS cannot ignore the rules that govern how tax disputes are handled, but taxpayers must actively enforce those rules.
In practical terms, this means SARS cannot simply change its case, ignore its own processes, or make decisions without proper reasoning, and taxpayers have the right to challenge this.
“Many taxpayers still think an obvious procedural defect will somehow correct itself,” says Nico Theron, founder of Unicus Tax Specialists SA. “It won’t. The courts push back only when a taxpayer recognises the breach and raises it properly.”
A growing pattern under scrutiny
Recent judgments show courts are taking a firmer stance where SARS steps outside the rules that govern tax disputes, including principles found in administrative law under the Promotion of Administrative Justice Act (PAJA), but also, importantly, under the specific procedural rules and statutory framework that govern tax matters.
In real terms, this includes situations where SARS:
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tries to change the basis of a tax assessment after it has already been issued
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does not follow the proper dispute procedures
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makes decisions, such as refusing to suspend payment, without proper reasoning
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fails to follow the standards that should guide its decision-making
Several recent cases have reinforced these principles in different procedural contexts.
In BASF v CSARS, the High Court confirmed that SARS cannot use its Rule 31 pleadings to introduce a materially different case to the one reflected in the original assessment. The court reinforced that Rule 31 is not a mechanism for rebuilding or re-engineering an assessment during litigation.
In Erasmus v Commissioner for SARS, the Supreme Court of Appeal similarly confirmed that SARS is bound by the factual and legal basis of the assessment it issues and cannot shift to a fundamentally different case in the Tax Court process, as this would undermine the integrity of the dispute framework and prejudice the taxpayer.
In Ferreira v Commissioner for SARS, the High Court overturned SARS’ refusal to suspend payment under the “pay now, argue later” regime. The court found that SARS failed to properly consider materially relevant security and that its decision lacked rationality and fairness, rendering it reviewable under administrative law principles.
“The common thread is simple,” says Theron. “SARS is a creature of statute. It must operate within the limits of the law, even when those limits are inconvenient.”
The courts will not do it for you
While these developments strengthen taxpayer protections, they should not create a false sense of security.
Courts do not monitor SARS’ conduct on their own. If a taxpayer does not identify a procedural flaw, raise it, and pursue the correct remedy, the issue may never be properly considered.
This applies equally to individuals disputing personal tax matters and businesses dealing with complex audits or assessments.
“The real issue is not just whether SARS is in breach,” says Theron. “It is whether the taxpayer and their advisers can identify the problem early, protect their position, and respond strategically before real damage is already done.”
Procedural rights, he adds, are only effective when they are enforced.
“If SARS oversteps and nobody calls it out, SARS is not going to correct itself. Taxpayers need to know when to push back, how to do it, and when court intervention becomes necessary.”
Nico Theron is the founder of specialist tax disputes firm Unicus Tax Specialists SA and has over a decade of tax-focused experience. He holds BCom Law (cum laude), LLM (Tax Law), BCom Honours Taxation and MCom Taxation (SA and International Tax), is the author of LexisNexis’ Practical Guide to Handling Tax Disputes, lectures tax at postgraduate level, and regularly trains tax professionals across South Africa.
He has also written extensively on BASF, Erasmus, Ferreira and related Rule 31 litigation, is often quoted in the media on complex tax disputes, and is well placed to comment on what this trend means for taxpayers, practitioners and the business community.
