A critical analysis of the ‘pay now argue later’ principle in the Tax Administration Act and the justifiability thereof

Abstract

The purpose of this research is to critically analyse and interpret the long standing and legislated principle widely referred to as the pay now argue later principle. This principle requires taxpayers to pay the assessed tax amount (including the associated interest and penalties) over to the South African Revenue Service (‘SARS’). This is notwithstanding the fact that the taxpayer is aggrieved by the assessment, that is, the taxpayer is not in agreement with the assessment and has in fact lodged an objection against the said assessment.

The fairness and constitutionality of the pay now argue later principle has been a subject of much debate within and outside taxation circles. In the year 2000, the Constitutional Court, in the Metcash Trading Limited v SARS1 case, found that the court a quo erred in finding the principle not to be constitutional (that is, the High Court found that the principle infringes on a basic human right- the right to access to court) and that the principle is indeed constitutional.

In this report, the researcher, through an analysis of the relevant provisions of the Constitution of the Republic of South Africa of 1996, an analysis of sections in the Tax Administration Act of 2011 making up the pay now argue later principle and the judgments of the High Court and the Constitutional Court, seeks to determine whether the principle infringes on the taxpayers’ right to access to court and if so, is the infringement a justifiable limitation under section 36 of the Constitution.