The Importance of Legal Representation At Tax Inquiries

The South African Revenue Service (“SARS”) is responsible for the administration of all tax legislation as defined within Schedule 1 of the South African Revenue Service Act 34 of 1997 (“SARS Act”). Therefore, SARS is responsible for, among other things, the launching, and administering of tax inquiries in terms of section 51 of the Tax Administration Act 28 of 2011 (“TAA”). These tax inquiries are one of the most potent information-gathering tools at SARS’ disposal. The tax inquiry’s purpose is ostensibly to obtain further information as it relates to a specific investigation that is currently ongoing by SARS.

The scope of the inquiry is regulated by an order obtained by SARS on an Ex Parte Application to the High Court. Such an order will be granted if the application establishes:

1. A person has failed to comply with an obligation under a tax Act; or
2. A person has committed a tax offence; or
3. A person has disposed of, removed, or concealed assets that may partially or fully satisfy an outstanding tax debt; and
4. The relevant material is likely to be revealed during the inquiry which will establish the existence of (1) - (3) as listed above.

Section 52(3) of the TAA entrenches the right to have a representative present when a person appears as a witness at such an inquiry.

The importance of having legal representation in such an inquiry cannot be stressed enough. The following aspects require consideration in this regard:
1.Effective preparation for the inquiry; and
2. Protecting the rights of the person summoned to appear as a witness during the inquiry; and
3. The possible future institution of criminal proceedings.


The inquiry order must refer to the alleged non-compliance or offence to be inquired into. The scope of the order must also be reasonably specific as to the ambit of the inquiry. Therefore, upon receipt of the order, a party who is being summoned to testify and provide information before the tax inquiry can ascertain and compare what they are being asked to testify against to what is stipulated in the order. Where the list of documents or questions made by SARS to the witness is outside the scope of the order, a witness may request that the Chairperson make a ruling that he/she need not answer that question.
Effective preparation for the inquiry is necessary as SARS will often position its line of questioning on documents/findings (such as expert reports etc) that have not been made available to the witness. The witness is allowed to study the documents to make an accurate and informed reply to the substance of the documents contained in the order. SARS is not allowed to question the witness on aspects that fall outside the scope of the order.


The Chairperson who is appointed to conduct the inquiry has a wide discretion to regulate the proceedings of the inquiry as they deem fit.

The only limitation to the discretion is the requirement that the evidence must be prepared to the standard of a trial court. The processes which the Chairperson regulates often lead to vagueness and procedural uncertainty. The resultant effect is that witnesses are often in the dark as it pertains to procedural fairness of the inquiry as the rules regulating such procedures are either not available or unclear.

The examiner who questions the witness is normally a senior advocate appointed by SARS. Although the TAA states that the nature of proceedings is inquisitorial, however, it is the opposite. Witnesses are often exposed to a hostile environment as the process led by SARS is accusatorial in nature. The severity of the cross-examination is intense. Moreover, the legal representative of a witness does not have the right to cross-examine other witnesses. Legal representatives also do not have the right to request information held by SARS as it relates to third parties to scrutinise or question their legitimacy.

Information presented by SARS, normally obtained from 3rd parties, is often presented to witnesses as indisputable facts and thus the witness is obliged to answer. Where the witness believes the examiner has overstepped the mark, they may object. Representation for witnesses therefore ensures that objections made by witnesses to any given line of questioning are given the appropriate consideration by the chairperson. It is vitally important to be represented at these Inquiries to ensure that your rights are protected.


Section 57(1) of the TAA states that a person may not refuse to answer a question during an inquiry on the grounds that it may incriminate the person. Section 57(2) provides the caveat that any incriminating evidence obtained during the inquiry is not admissible in criminal proceedings against the person giving the evidence. However, nothing is preventing SARS from using this inadmissible evidence to “design a playbook” to pursue criminal sanction against witnesses on proper notice issued in terms of section 40 of the TAA. therefore, while the evidence itself isn’t admissible, the witness may be called to give that same evidence to SARS in terms of a section 40 notice.


The Tax Inquiry system provides SARS with vast and often draconian powers against a person summoned to appear before it. The exercise of this power must be assessed from a practical level, measured, and continuously tested to determine whether it upholds and protects the taxpayer’s rights. It remains to be seen whether the provisions regulating these inquiries will be able to survive constitutional scrutiny if it purports to merely be an exercise to obtain information.

The only remedy currently available where SARS exceeds its powers within a tax inquiry is to take the matter on judicial review in terms of the Promotion of Administrative Justice Act 3 of 2000.

Intellectual property disclaimer:
The contents of any article published by CTC Stander & Associates should not be construed as professional legal advice.