Draft IN: Reduced Assessments: “Readily Apparent Undisputed Error”

SARS has published a new interpretation note in draft, which provides guidance on the interpretation and application of section 93(1)(d) of the Tax Administration Act with specific focus on the phrase “readily apparent undisputed error”.

Section 93(1)(d) provides an alternative to the dispute resolution process under Chapter 9 allowing taxpayers a less formal mechanism to request corrections to their assessments if certain requirements are met, without having to follow the objection process under Chapter 9.

Due to the misuse of the alternative mechanism, section 93(1)(d) was amended to include the requirement that the error either in an assessment by SARS or in a return by a taxpayer must be “readily apparent” and not just “apparent”.

The Memorandum on the objects of Taxation Laws Amendment Bill, 2015, explains the reason for the amendment as follows:

“Section 93(1)(d) of the Tax Administration Act was inserted to allow taxpayers a less formal mechanism to request corrections to their returns and so reduced assessments, without having to follow the objection and appeal route to do so. However, taxpayers have attempted to use these requests for correction to raise substantive issues that would more properly be the subject of an objection under section 104, so as to bypass the timeframes and procedures for an objection. Furthermore, taxpayers and unregistered tax practitioners have also attempted to use the requests for correction to obtain fraudulent refunds for multiple years. For these reasons, the wording has been amended to provide that SARS must be satisfied that there is a ‘‘readily apparent’’ error to clarify the nature of the errors anticipated here.”

Comments in respect hereof may be emailed to policycomments@sars.gov.za by 29 October 2021.

Find a copy of the draft IN here.

27/08/2021