011 463 5566 tonyd@harding.co.za

Recent case

In circumstances in which a taxpayer fails to pay a ‘tax debt’ (defined in s 1 read with s 169(1) of the Tax Administration Act as being an amount due or payable to SARS), a senior SARS official may, under s 179, issue a notice to a third party holding a taxpayer’s moneys to pay over an amount to SARS in satisfaction of the outstanding tax debt. Section 179(5) states that a third-party notice may be issued only after delivery to the tax debtor of a final demand for payment, which must be delivered at least ten business days before the issue of the notice. The issue that arose in the case of SIP Project Management (Pty) Ltd v CSARS (11521/2020) [2020] ZAGPPHC (29 April 2020) (206 TSH 2020) was whether there was proper delivery of the required letter of demand, which must precede the third-party notice given to the third party, in this instance, the taxpayer’s bank.The taxpayer’s version was that there was no letter of demand on the eFiling profile and hence no delivery, while SARS contended that the letter was system-generated and reflected on the SARS system.

The court held that it is not enough to prove the existence of a final letter of demand, since the letter must also be delivered to the taxpayer. To quote: The Rules for Electronic Communication prescribed in terms of the Acts state  that an electronic filing transaction includes a communication in relation to payment made by SARS and other electronic communication that is capable of generation and delivery in a SARS electronic filing service. In  terms of Rule 3(3) if an acknowledgement of receipt for the electronic communication is not received, the communication should be regarded as not delivered, except for an electronic filing transaction. It therefore follows  that if SARS did deliver the letter of demand via the applicant’s eFiling profile, it will be deemed to have been delivered. SARS only needs to show that the demand was delivered via the electronic eFiling profile of the taxpayer, once it was challenged by the applicant that these documents do not appear on the eFiling page of the taxpayer. It should have been relatively simple for SARS to furnish proof that the letter does appear on the eFiling system, but this was not done.

The court thus held the thirdparty notice to be null and void, the peremptory procedure not having been complied with. Accordingly, SARS was ordered to repay the amount to the taxpayer, with interest as from the date of payment by the bank to SARS