Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

2.2 THE RELEVANT CONSTITUTIONAL PROVISIONS

2.2.5 Conduct, audits and inquiries
Wheelright K in Taxpayer’ Rights in Australia in Bentley D Taxpayers’ Rights: An
International Perspective,60 gives a good summary and places into perspective  what would be considered to be fair procedural due process when a tax authority like SARS initiates an inquiry and audit. He states that taxpayers should be given prior notification of the audit and the opportunity to request postponement of the audit if they have good reasons. As in any administrative decision, the tax authority should explain to taxpayers why they are chosen for an audit, what taxes and what years the audit will cover, what documents, books and other records will be required, how the audit will proceed, and give the taxpayer the opportunity to contact and use a legal or other representative in dealing with the tax authority. All these statements are in line with the provisions of s 33 of the
Constitution and s 3 of PAJA.

The author goes on to express the view that at the commencement of the audit the taxpayer should receive clear guidelines from the revenue authority, setting out the audit procedures, the rights and duties of taxpayers during the audit as well as details of the tax authorities practices and rules governing the outcome of the audit.

Compliance with these requirements would satisfy some of the constitutional obligations placed on SARS, and holds accord with the SARS Service Charter and Standards (under review) referred to as the Code of Conduct in this thesis, and further analysed in sections3.3: Lawfulness, 3.6: Legitimate Expectations, 4.2.4: Services must be provided impartially, fairly, equitably and without bias, and 4.2.5: Public administration must be accountable, infra.

Furthermore, the application of ss 74A and 74B must not breach the rule of law  and the principle of legality. SARS must be lawfully authorised to invoke the powers conferred upon it in accordance with the jurisdictional facts of these provisions,61 when approaching taxpayers for inquiry and audit. A decision of SARS must be rationally related to the purpose for which that power was given them, ensuring that the conduct of SARS is not unlawful or unconstitutional.

In accordance with Circular 230 Disclosure

Next:  Chapter 2 – 2.2.6 Conduct and legitimate expectations

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Footnotes:

60Wheelright K Taxpayer’ Rights in Australia in Bentley D Taxpayers’ Rights: An International Perspective Revenue Law Journal Bond University: Queensland 1998 at page 49.
61Fedsure 1998 (12) BCLR 1458 (CC); President of the Republic of South Africa v South African Rugby Football Union 1999 (2) SA 14 (CC) at para [42]; and also President of the Republic of South Africa and another v South African Rugby Football Union and others 2000(1) SA 1 (CC).