The South African Revenue Service (SARS) is afforded wide-reaching powers to come after tax abusers in the country, including warrantless searches of business properties, and taking money out of individuals’ bank accounts.
Some legal experts have described SARS’ reach as “horrifying”, largely in relation to the shock and anxiety that some business owners are confronted with when the taxman comes knocking unexpectedly.
According to legal firm Shepstone & Wylie, powers afforded to SARS officials through the Customs and Excise Act (CEA) are “downright scary”.
In terms of section 4(4)(a) of the CEA, a premises that is licensed or registered with SARS, and occupied by and used by someone licensed or registered with SARS, a warrant is not necessary for officials to enter it.
Anyone in a situation where this happens would immediately phone their attorney, the firm said. They would then be advised that the SARS officials must be given access to the premises.
“In terms of section 4 of the CEA, if after declaring their official capacity, a SARS official who is barred from entering the licensed or registered premises may break open any door or window or break through any wall on the premises for the purpose of entry and search,” it added.
Once inside, the SARS official has the power to question any person he finds on the premises and to break up any ground or flooring if he reasonably believes doing so is necessary.
As long as the SARS official can show that the property damage caused was caused through his bona fide actions, the person who suffered the loss or damage may not claim compensation.
The firm noted that, until a 2013 ruling from the Constitutional Court, SARS did not confine these searches to business premises, but also conducted warrantless searches of homes.
However, this has since been tempered and amended, with the tax officials now needing to possess a warrant to search a private residence.
In addition to this, the courts have also ruled that SARS is legally obliged to furnish a copy of an ex parte application and the supporting affidavits which were used to obtain the warrant.
Eyes on your bank account
But SARS’ powers do not end there.
In addition to the power to conduct warrantless searches of business premises, SARS officials may also stop and board any vehicle in the Republic and search the vehicle and any person in the vehicle, the legal firm said.
“Officials also have the right to secure any warehouse, storeroom, vehicle, etc., if the official believes that a contravention under the CEA has been or is likely to be committed.”
For individual taxpayers, the taxman is also empowered to claw back money owed to it through various channels, without warning.
SARS can deduct money from your income via garnishee orders to your employer or clients.
The Revenue Service can also attach your bank funds, withhold tax clearances and refunds, and get a court judgment that will blemish your credit record.
Despite these extensive powers, Shepstone & Wylie said the taxman can only exercise these powers if they are reasonable and proper procedure is followed.
For instance, SARS officials must be acting in the course and scope of their employment when entering a licensed or registered premises and must have the genuine belief that the licensee or registrant has committed an offence in terms of the CEA.
As an organ of state, the tax service has a higher duty to respect the law, fulfil procedural requirements and tread carefully when dealing with rights.
The courts have ruled that “there must be a rational connection between the purpose of the law and the limitation imposed by it”.
The law firm warned that any entity that holds a license or registration issued in terms of the CEA could find itself on the receiving end of a warrantless SARS raid.
While being subjected to a raid is traumatic, the experts said that its important that a clear head be maintained, and that procedure is followed.
“Promptly contact a legal representative and request their immediate presence to ensure that the rights are protected; and establish the purpose of the raid,” it said.
Importantly, record who the SARS officials conducting the raid are, and what documents and/or equipment the officials remove from the premises.
