Tax Ombud, Judge Bernard Ngoepe, has formally requested that Minister of Finance, Pravin Gordhan  approve an investigation into the issue of delayed tax refunds. The South African Revenue Service (“SARS”) is already under scrutiny and pressure after collecting approximately R30 billion less than projected in 2016, even though corporate taxes increase over the same period and brought in an increased R6.5 billion for state coffers.

Speaking on Sunday 12 March 2017, Ngoepe said that his office conducted two related categories of investigations:

Category A: because of complaints received by individuals or companies; and
Category B: considering “systemic problems” at SARS.
Category A forms part of the mandate of the Tax Ombudsman, while Category B requires approval from Gordhan. Ngoepe stated in his Sunday address that:

“Such complaints were so many that it would have been irresponsible of me not to approach the minister for a Category B investigation…If you are getting a lot of Category A complaints, which tells you there is probably something wrong with the SARS system, then you begin to say, ‘maybe let’s look at the system’. I have only submitted ...my request for approval so I can investigate SARS’s systemic problems relating to alleged delayed refunds of monies, which should be paid back to taxpayers.”

In 2016, when questioned about refund delays, SARS denied that they were a result of a funding crunch and said that they were due to a “tightening of controls”. This appeared contrary to a survey conducted by the South African Institute of Tax Professionals (SAIT) in 2016 that showed that of 311 tax professionals, 25% said their clients were experiencing delays (anywhere from 3 months to over a year) based on frivolous and often repeated queries.

The Tax Ombud’s Annual Report for 2016 had already noted the delay in the payment of refunds as one of the most serious and systemically concerning issues encountered by taxpayers.

National Treasury confirmed on Tuesday 14 March 2017 that Gordhan had received the letter from the Ombud. The National Treasury’s legal unit is attending to the matter.

Ngoepe stated that, because he submits an annual report to Parliament, the investigation findings will most likely be made public.

In addition to the limited statutory remedies provided for in the Tax Administration Act, taxpayers can also seek procedural relief in court under administrative and/or constitutional principles. Often the initiation of court proceedings renders speedy results.

* To lodge a complaint with the Tax Ombud, call 0800 662 837 or visit www.taxombud.gov.za