A recent tax dispute ruling has reignited the age-old debate over the right of appearance by a lay person in the Tax Court and whether the Tax Court falls within the ambit of a "court of law."

The High Court judgment in Poulter v CSARS (A88/2023) [2024] ZAWCHC 97 (2 April 2024) involved a taxpayer contesting the assessment of her taxable income for 2018, and the Tax Court decision confirming such assessment to be in order, made with no adherence to the taxpayer’s right to representation. 

The initial Tax Court order was made in contradiction to the historically accepted principle that a taxpayer may be represented in the Tax Court by persons who are not legal practitioners. In the case at hand, Mr. Gary Van der Merwe, being the taxpayer’s father and the taxpayer’s duly authorised representative, was deemed ineligible to represent her as he lacked legal practitioner status.

Defining the Tax Court's Status

As a point of departure, it goes without saying that even though the Tax Court fulfils a more administrative function as a “court of revision”, it is a crucial entity, and primary port of call within the realm of tax disputes and related matters. It plays a significant role in upholding the principles of fairness and justice in tax law. However, it is imperative that the Tax Court does not adopt a bullying stance in its rulings.

The root of debate is if the Tax Court qualifies as a 'court of law' under the Legal Practice Act and the Constitution. While acknowledging the Tax Court’s procedural resemblance to judicial proceedings, it is made evident in the judgment so handed down by the learned Binns-Ward J in the Western Cape Division of the High Court that:

“There is no basis to distinguish the characterisation of the tax courts in this regard from the characterisation of their statutory predecessors by the Appellate Division and the Constitutional Court. As evident from the discussion earlier in this judgment, that jurisprudence is to the effect that the Tax Court is a ‘court of revision’, not a ‘court of law’.”

For a taxpayer already burdened with a potentially unjust or incorrect tax liability claimed as due to SARS, the Tax Court serves as the first line of defence. It is essential that a bona fide taxpayer, whether representing themselves or through an authorized representative, be given the opportunity to be heard.

Practices Generally Prevailing and the Err of the Tax Court

Upon dissection of historical precedent, judgments over the last century have made clear the stance on the creation and legal standing of “special courts”, not being construed as “courts of law”. Further, coincidently or not, the question on representation has also tended to crop up in similar cases and not with dissimilar procedural facts.

In the current matter, the Appellant's counsel argued vehemently that, contrary to the Tax Court’s finding, Mr. Van der Merwe, duly authorized by a power of attorney, should have been permitted to represent the taxpayer. Furthermore, they contended that the court erred in issuing what was termed a 'default judgment' without considering crucial evidence presented in the dossier, as per Tax Court rules.

This issue speaks to the essence of the audi alteram partem principle, which must be upheld at all times. This principle dictates that all parties involved in a dispute must be given a fair opportunity to present their case and be heard. By disregarding this principle, the Tax Court risks infringing upon a taxpayer's right to natural justice.

Moreover, the inability to deliver generally binding or precedent-setting decisions by the Tax Court and similar special tribunals, together with the applicable jurisdictional limitations were cited to support its classification as an administrative tribunal rather than a court of law

Don’t Be Bullied by SARS

The High Court's decision to uphold the appeal, set aside the Tax Court's order, and remit the case for a new hearing, not only addressed the specific case but also confirmed the already established principle that anyone can represent a taxpayer in the Tax Court.

Even though the interpretation of representation in the Tax Court, as contained in the Dispute Rules is sufficiently inclusive, stating “a party or a person authorised to appear on the party’s behalf”, the lingering questions remain regarding the Tax Court's adherence to such Rules.

Where taxpayers find themselves on the wrong side of SARS, it is recommended that a seasoned tax attorney, with trial advocacy experience, be consulted. This will not only increase the taxpayer’s chances of success against SARS, before proceedings are instituted in the Tax Court, but is also fundamental to ensure the correct legal strategy is followed.

Enlisting the assistance of the astute tax attorney will guarantee legal professional privilege on all information disclosed and ensure the taxpayer is best protected should the matter advance to litigious stages

Written by Jashwin Baijoo, Head of Strategic Engagement & Compliance at Tax Consulting SA; and Natasha Wilkinson, Head: Tax Disputes and Legal Strategy at Tax Consulting SA