Commissioner for the South African Revenue Service v Candice-Jean van der Merwe

The taxpayer declared a receipt of R142,901,673 as a 'gift from her companion abroad' in her 2014 tax return. SARS investigated and settlement negotiations ensued after SARS obtained a preservation order. In February 2016, through her attorneys (Werksmans), the taxpayer reached a written settlement agreement with SARS whereby approximately R110.3 million would be treated as taxable income. An agreed assessment of R44,175,675 was issued on 17 February 2016, and payment was made on 10 March 2016 from funds held in trust by her attorneys. The correspondence expressly stated that the agreed assessment was issued in terms of section 95(3) of the Tax Administration Act 28 of 2011, which provides that such assessments are not subject to objection or appeal. The preservation order was discharged and litigation withdrawn. Two years later, in September 2018, the taxpayer lodged an objection to the additional assessment. SARS initially granted condonation for the late objection but subsequently withdrew it on 22 February 2019, and issued a notice of invalid objection on 25 February 2019. The taxpayer then filed a notice of appeal on 5 March 2019. SARS advised this was invalid as there was no valid underlying objection. The taxpayer delivered a rule 56 notice and then applied for default judgment against SARS for its alleged failure to file a statement of grounds of assessment under rule 31.

• Whether an agreed assessment issued in terms of section 95(3) of the Tax Administration Act 28 of 2011 is subject to objection and appeal
• Whether the taxpayer's objection to the agreed assessment was valid
• Whether the taxpayer's notice of appeal was valid in the absence of a valid objection and decision thereon
• Whether the jurisdictional requirements for an application for default judgment in terms of rule 56 of the Tax Court Rules were satisfied
• Whether SARS was in default of an obligation to file a rule 31 statement of grounds of assessment
• Whether a lay person may represent a natural person in court proceedings

The appeal succeeded with costs, including costs of two counsel. The order of the high court was set aside and replaced with an order dismissing the appeal with costs, including costs of two counsel.

An agreed assessment issued in terms of section 95(3) of the Tax Administration Act 28 of 2011 is not subject to objection or appeal. A valid notice of appeal under section 107(1) of the TAA can only be filed after delivery of notice of a decision on an objection under section 106(4). Without a valid objection and decision thereon, there can be no valid appeal. An application for default judgment in terms of rule 56 of the Tax Court Rules requires that the applicant demonstrate compliance with jurisdictional prerequisites, including the existence of a valid objection and valid notice of appeal. A notice of invalid objection issued by SARS is not a 'disallowance' of an objection on the merits under section 106(2). A court considering an application for default judgment, even on an unopposed basis, must determine whether a proper case has been made out on the papers and whether jurisdictional requirements are satisfied. A lay person may not represent a natural person in a South African court, in accordance with common law and section 25 of the Legal Practice Act 28 of 2014.

The Court expressed regret that the high court did not engage with the tax court's finding regarding non-compliance with the TAA provisions and that its order was incomplete in failing to set aside the tax court order after finding the appeal successful. The Court noted that the criticism directed at the tax court for not making a ruling on the application to strike out certain averments was unfounded, since the decision on condonation did not detract from the fact that even on an unopposed basis the taxpayer failed to make out a proper case. The Court observed that the pitfalls of allowing lay representation are obvious, including that the rules would not oblige such representatives to file a power of attorney, which could lead to subsequent denials of authority to the detriment of the administration of justice. The Court characterized SARS's view of the application as 'cynical, vexatious and an abuse of the court procedures' in correspondence, though this characterization did not form part of the ratio.

This case is significant for clarifying the nature and finality of agreed assessments under section 95(3) of the Tax Administration Act. It establishes that such assessments are not subject to objection or appeal, even if the taxpayer later regrets the agreement. The judgment emphasizes the importance of compliance with jurisdictional requirements in tax litigation, particularly that a valid appeal must be preceded by a valid objection and a decision thereon. The case also clarifies that a notice of invalid objection is not a 'disallowance' under section 106(2) that triggers appeal rights, and that rule 52(2)(b) is the proper mechanism for challenging SARS's determination of invalidity. The judgment underscores that courts must ensure jurisdictional compliance even when considering unopposed applications. It also reaffirms the common law position prohibiting lay representation of natural persons in South African courts, now codified in the Legal Practice Act.