To appeal or not to appeal

Indirect Taxes:

VAT is a comprehensive self-assessment tax with Inland Revenue’s role set as the inspector rather than assessor. This compels businesses to understand the requirements of the VAT Act and to maintain diligent administration of their accounting records at all times.

The VAT Act provides the necessary rules businesses (i.e. taxpayers) must follow to ensure that VAT calculations submitted are accurate. In addition to this, the Act also provides the Commissioner of In-land Revenue with guidance he/she can use to make certain decisions. Such decisions may include a tax-payer’s application for voluntary VAT registration, the cancellation of a taxpayer’s VAT registration, the allocation of tax periods, the allowing of input tax claims, value of imports, etc.

Certain decisions the Commissioner makes are “appealable” in terms of the Act. The term “appealable decision” is defined in the VAT Act and refers to any decision under the listed sections of the Act, or any assessment made by the Commissioner under the VAT Act. Where in disagreement with an assessment or decision, the Act affords the taxpayer the opportunity to object or appeal. However, in order to successfully lodge an objection or appeal, strict guidelines must be adhered to.
Objections:
Section 27 of the VAT Act states that any tax-payer who disagrees with an appealable decision may lodge an objection to the Commissioner. The objection must: (1) be submitted to the Commissioner within 90 days after the date of the assessment or decision notification; (2) be in writing; and (3) specify the detail of the grounds on which it is made.
The Commissioner is required to consider the objection, after which he/she can then either allow the objection (in whole or in part), or disallow it. Appeals:
Where the taxpayer is still not satisfied with the Commissioner’s objection decision, section 28 of the VAT Act allows the taxpayer to appeal to the Special court. The appeal must be: (a) made in writing; and (b) submitted within 60 days after the taxpayer was notified of the objection decision.
It is important to remember, however, that the person appealing is limited to the grounds set out in the preceding objection. No further grounds or additional information will be considered at this stage.
The special court will then consider the appeal and either:
*support the objection decision (or vary it); or
*refer the objection decision back to the Commissioner for reconsideration.
Keep in mind that when you are of the view that the VAT assessment you received is excessive or a decision taken by the Commissioner is wrong, the burden of proof will rest on you to prove the contrary. Thus, if you are in disagreement with a VAT assessment or decision notification from In-land Revenue and you are in doubt on how to proceed, please feel free to contact us for advice.