After years of uncertainty, a full bench of the high court has ruled SA’s tax courts are not “courts of law” and non-lawyers, including accountants, can represent taxpayers in any of the country’s tax courts.
This means all taxpayers in SA can have a tax practitioner represent them if they bring a dispute to any tax court in SA. This comes after nearly a decade-long battle between the SA Revenue Service (Sars) and a swimwear model who received a R142m “gift” from an overseas companion with which Sars took issue.
Sars took action against businessman Gary Walter van der Merwe, his daughter Candice-Jean Poulter and others in 2013 over what it deemed as tax debts. Sars froze various assets.
Poulter opposed Sars. In assessing her 2014 tax year, Sars noted she received a R142m “gift” from an unknown person overseas. Sars began interrogating her tax payments and the gift.
After much correspondence between Poulter’s lawyers and Sars, it was agreed she would pay R44m in tax. However, Poulter began contesting this payment years later. This was fought all the way to the Supreme Court of Appeal (SCA) in 2022, and the SCA ruled she had begun contesting too early and Sars had done nothing wrong. The dispute had to instead play out and go to the tax court, which it did.
The tax court ruled against her in her absence. It confirmed she must make the payments Sars asked for. The tax court had refused her father’s request to act on her behalf, throughout the proceedings. It was this refusal that was taken up by Poulter on appeal to the full bench of the high court in Cape Town. She argued the court’s refusal was wrong in law and thus its decision must be set aside.
The tax court said only a legal practitioner could do so because it regarded itself as a court of law.
In terms of legislation, only admitted legal practitioners can represent others in “courts of law”. However, it has long been unclear to practitioners whether tax courts are like other “courts of law” or more akin to, for example, the Commission for Conciliation, Mediation and Arbitration.
Strict requirements
The full bench of the high court on Tuesday ruled that tax courts, despite their name, are not courts as in courts of law. This meant the strict requirements in legislation about who can act on others’ behalf “do not apply”.
“There is nothing in the regulations to suggest that the references ... to a taxpayer’s representative must [mean] a person admitted as a legal practitioner,” wrote judge Ashley Binns-Ward for a unanimous bench, all experienced tax judges.
“Experience tells that in the past taxpayers have often been represented in proceedings before a tax court by an accountant or similarly qualified tax practitioner rather than a legal practitioner.” Binns-Ward was referencing tax courts in older times, before modern tax legislation.
After assessing all the current laws and judgments regarding tax courts, Binns-Ward ruled that tax “courts” operate completely differently from ordinary courts. Tax courts, for example, “are not open to the public” and their rulings do not identify taxpayers. Tax courts are also made up of non-judges, who are experts in accounting, sitting with a judge.
“All of the aforementioned characteristics of the tax court,” he wrote, “impel the conclusion that its function is essentially that of an administrative tribunal.” That a tax court is called a “court” is somewhat irrelevant. “The tax court [is positioned] outside the judicial system ... tax courts are not courts of law.”
Because of this, the tax court was “misdirected in refusing” Poulter’s father to act as her representative. As a result, its ruling was wrong.
Binns-Ward said his judgment was now “binding not only on the parties to the current proceedings but on all parties to appeals in the tax court”.
Poulter’s matter was sent back to the tax court to start afresh, for a date to be determined. Sars was ordered to pay her legal costs.
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