Tax disputes leading to litigation against the South African Revenue Service (SARS) are rarely about insignificant amounts. There are numerous historic examples of disputes amounting to billions of rands. As such, litigation is often viewed as the definitive mechanism through which tax disputes are resolved. It offers structure, formality, and ultimately, a judgment that determines the outcome. 

In theory, this produces a clear result: a successful party and an unsuccessful one. In practice, however, tax litigation rarely delivers such clarity. While judgments provide legal finality, they do not necessarily produce commercial certainty. 

Increasingly, taxpayers and advisors are recognising that the concept of “winning” in litigation is far more nuanced than it appears, and that a clear outcome may, in many cases, be an illusion.

Litigation: A Powerful Tool, But Not Without Risk

Recent case law underscores just how unforgiving the litigation process can be.

In Baseline Civil Contractors (2026) (“Baseline”), the Court confirmed that a taxpayer cannot introduce a fundamentally new case at the appeal stage if it was not properly raised in the objection. 

Procedural requirements continue to play a decisive role in whether disputes are even heard. Across the Tax Court, a number of matters have been determined primarily on issues relating to procedure, including condonation applications, admissibility of evidence, and strict adherence to dispute timelines.

Each of these steps introduces risk.

A missed deadline, an incomplete objection, or an incorrectly framed issue can fundamentally alter the trajectory of a dispute. Once litigation is underway, the ability to correct these issues becomes limited.

Where traditional litigation approaches are adopted, disputes can become increasingly confrontational, with legal arguments taking precedence over practical resolution. While this may create the perception of strong advocacy, it does not necessarily serve the client’s best interests.

This adversarial nature of litigation often shifts the focus away from resolution.

For taxpayers, this creates a challenging dynamic. Litigation may feel like a strong and decisive response, but it often leads to:

• increased cost, 
• extended timelines, and 
• reduced flexibility. 

The decision to litigate should therefore be taken with careful consideration, not as a default response, but as a strategic choice for a clear outcome.

A System Increasingly Driven by Procedure

Recent SARS dispute resolution judgments highlight a growing emphasis on procedural compliance within the litigation framework. This trend is reflected in the SARS published Tax Court judgments for the 2023 to 2026 period, where procedural issues have played a decisive role in determining whether disputes proceed. 

Similarly, the High Court judgments published by SARS for the same period demonstrate that disputes may fail due to non-compliance with prescribed processes rather than the strength of the underlying tax position. At appellate level, rulings like Baseline have introduced greater certainty, but also increased rigidity in how disputes are adjudicated.

The Commercial Reality of Prolonged Disputes

The commercial implications of this shift are significant. 

Litigation unfolds over time, often over several years. During this period, legal costs accumulate, internal resources are diverted, and uncertainty persists. Even where a taxpayer ultimately succeeds, the benefit of that success must be considered in context. The cost of litigation can materially reduce the value of a favourable outcome. 

From SARS’ perspective, drawn-out litigation delays revenue collection and requires the allocation of resources that could otherwise be directed toward broader compliance initiatives.

The Reality of Settlement

A defining feature of tax litigation is how many disputes ultimately conclude. Despite extended procedural progression, a significant number of matters are resolved through settlement rather than final judgment. 

The High Court decision in Inhlakanipho Consultants (Pty) Ltd v CSARS (2025) confirmed that settlement agreements are binding and enforceable. This provides legal certainty but also highlights the broader point that many disputes are capable of resolution without prolonged litigation. 

The question that arises is whether those settlements could have been achieved earlier, without the intervening cost and delay.

Reassessing What “Success” Means

Increasingly, taxpayers are revisiting this question. After extended periods of litigation, the focus often shifts from whether the case can be won, to whether the process has delivered a commercially sensible outcome. 

In many instances, disputes evolve beyond their original scope. Costs increase, risks become more pronounced, and the underlying issue becomes obscured by procedural developments.

A Strategic Shift in Approach

We are seeing a growing number of taxpayers re-evaluating ongoing disputes, particularly those that have become protracted or procedurally complex. In many cases, this involves re-engaging SARS on a structured, without-prejudice basis, even where litigation is already well advanced. 

This is not a concession of position, but a strategic recalibration. Where properly managed, this approach can result in outcomes that provide certainty, reduce cost exposure, and bring disputes to a close in a commercially viable manner.

Beyond Winning

Litigation is one component of a broader dispute resolution framework. Winning a case is one outcome. Achieving a result that is commercially sustainable, time-efficient, and aligned with the taxpayer’s broader objectives is another. The two are not always the same.

Written by André Daniels, Head of Tax Controversy & Dispute Resolution at Tax Consulting SA