Legal Privilege Under s 42A of the Tax Administration Act Analysed

• Date: 01 March 2021
• Published date: 01 March 2021
• Author: Fareed Moosa
• Pages: 13-24
• DOI: 10.10520/ejc-btclq_v12_n1_a4

13

© Siber ink

Legal Privilege Under s 42A

of the Tax Administration Act

Analysed

FAREED MOOSA*

AbstrAct

Section 42A of the Tax Administration Act 28 of 2011 recognises that

taxpayers have the right to claim legal professional privilege (such as legal

advice privilege and litigation privilege) during a search-and-seizure opera-

tion as well as during an inquiry. If privilege is claimed but disputed by SARS,

then section 42A regulates the procedure to be followed for such dispute to

be resolved. This article analyses its provisions by employing the trite princi-

ples of statutory interpretation emerging from case law. In terms of section

42A, a legal practitioner must be appointed to take possession of any material

over which privilege is claimed, and such person must adjudicate a dispute

related to that status in a manner that is fair and transparent. It is argued that

the relevant taxpayer claiming privilege must, in its founding papers, provide

a detailed explanation of the background of the allegedly privileged informa-

tion. Unless this is done, the taxpayer will unlikely discharge the burden of

proving that the information is privileged, nor will the taxpayer be able to

provide sufficient contextual justification for the protection thereof by non-

disclosure. With reference to the decision in A Company v C:SARS, this article

argues further that, when adjudicating a dispute contemplated by section

42A, a legal practitioner ought, in general, to be slow to undertake an inspec-

tion in private of the allegedly privileged material. An exception would be

where SARS is given access to the material so that it is equally placed, as the

taxpayer, to make informed submissions on the question of privilege.

1 Introduction

Section 7(2) of the Constitution of the Republic of South Africa, 1996

(Constitution) provides that ‘[t]he state must respect, protect, promote

and fulfil the rights in the Bill of Rights’1 (BoR). Section 7(2) operates in

tandem with section 8(1). The latter stipulates that the BoR ‘applies to all

law,2 and binds the legislature, the executive, the judiciary and all organs

of state’. Thus, the Tax Administration Act 28 of 2011 (TAA), South Africa’s

premier tax administration statute, operates subject to taxpayers’ funda-

1

* Associate Professor in the Department of Mercantile & Labour Law, University of

the Western Cape

In C:SARS v Sunflower Distributors CC 2015 JDR 2546 (GP) para 4, it was held that

the ‘very existence’ of the state depends on tax collection by SARS.

2 The Constitution does not define ‘law’ for its purposes. In the context of s 8(1), the

definition of ‘law’ in s 2 of the Interpretation Act 33 of 1957 ought to apply.