SARS is seizing property and liquidating companies as it hunts for R451 billion in outstanding tax debt

The South African Revenue Service (SARS) is stepping up efforts to recover unpaid tax, with enforcement measures that can include the attachment and sale of assets, court action and the liquidation of companies.

This is according to Tax Consulting SA’s Partner and Head of Strategic Engagement & Compliance, Jashwin Baijoo, who said the revenue service is increasingly focusing on debt collection.

SARS can use several measures to recover outstanding tax debt, depending on the circumstances and legal requirements.

These include third-party appointments, civil court judgments, asset-preservation measures and the sequestration or liquidation of estates.

Third-party appointments can allow SARS to recover money through a bank, employer or another party holding funds owed to a taxpayer.

The revenue service may also use external collection agencies. Its annual report records R2 billion collected through outsourced debt recovery during the 2025/26 financial year.

SARS also collected R20 million through the Special Expedited Compromises initiative for tax practitioners and R82 million through the Compromises Below R10 Million Project.

These initiatives form part of a broader approach that combines negotiated settlements, improved collection processes and compulsory recovery measures.

The taxman’s annual report indicates that active recovery steps are being taken against R451 billion in gross receivables.

However, the amount includes debts at different stages of the collection cycle, with varying prospects of recovery.

The revenue service is focusing on collecting outstanding debt, preventing new arrears, and identifying taxpayers who are not meeting their obligations.

Its compliance priorities include increasing cash collections on debt, preventing impermissible and fraudulent refund claims, and encouraging taxpayers to regularise their affairs through voluntary disclosure interventions.

SARS is also targeting syndicated tax and customs crimes, valuation fraud and customs offences. Data science and artificial intelligence are being used to identify and mitigate compliance risks.

Interventions through SARS’s Compliance Programme generated R319.2 billion in revenue during 2025/26, up from R304 billion in 2024/25. This represents an increase of 5%.

SARS also reported cash collections from receivables of R98 billion, compared with R95 billion in the previous financial year. Including provisional tax, total collections reached R110.5 billion.

The revenue service has expanded its internal debt-collection capacity and improved behavioural modelling, taxpayer segmentation and process automation.

These measures are intended to improve collections and help SARS identify which debts can realistically be recovered.

The consequences of unpaid tax

Baijoo warned that taxpayers who ignore demands to settle valid overdue liabilities risk facing increasingly serious enforcement action.

SARS may attach and sell movable or immovable assets to recover outstanding amounts. Court-appointed sheriffs can also execute warrants to seize goods and enforce payment.

Further consequences may include credit-related difficulties and legal proceedings against individuals or businesses.

Companies with unresolved tax debts may face liquidation proceedings, while sequestration may be pursued in applicable cases involving individuals or estates.

SARS may also pursue debts through third parties and external collection agencies. However, its enforcement powers are subject to legal requirements.

Taxpayers who dispute an assessment may have the right to object or appeal through the prescribed procedures. They may also apply for a suspension of payment where the relevant requirements are met.

The revenue service’s annual report noted that payment cannot be enforced where recovery proceedings have been suspended under section 164(2) of the Tax Administration Act.

The distinction between a disputed assessment, a debt covered by a payment arrangement and an overdue liability available for enforcement is therefore important.

What taxpayers should do now

Fortunately, Baijoo said South Africans who cannot afford to pay their tax debt in full may be able to negotiate a compromise with SARS or apply for a payment arrangement.

A compromise allows a qualifying taxpayer to offer to settle part of their tax debt. To qualify, taxpayers must demonstrate their current financial hardship and provide an estimate of their net worth.

Their financial circumstances and previous spending may also influence the taxman’s consideration of the proposed settlement.

A compromise may involve a lump-sum payment or instalments. It may be available to qualifying individuals, trusts and companies.

It can apply to different types of tax debt, including personal or corporate income tax, value-added tax (VAT) and pay-as-you-earn (PAYE).

Taxpayers who do not qualify for a compromise, but cannot afford to pay their debt immediately, may apply for a deferral of payment.

This allows them to request an agreement to settle the outstanding amount through monthly instalments, subject to SARS’s conditions.

Unlike a compromise, a payment arrangement generally does not result in the write-off of interest and penalties. The taxpayer remains liable for the full amount, which is paid over time.

Baijoo urged taxpayers who receive correspondence from SARS to address it promptly, particularly where it concerns an assessment, a payment demand or outstanding tax debt.

Those who disagree with an assessment should use the appropriate dispute-resolution procedures and establish whether a suspension of payment is available and necessary.

Taxpayers who cannot afford to settle their debt should also consider whether they qualify for a compromise or payment arrangement before the matter escalates.

A request for relief can be made proactively, rather than waiting for a final demand or enforcement action.