Hard SARS crackdown for these taxpayers in South Africa

The South African Revenue Service (SARS) is cracking down on trust tax debt by fast-tracking civil judgments, giving trustees just days to act or risk having assets attached.

This signals a sharp end to leniency and a push for strict compliance, with SARS already issuing notices to trusts with outstanding tax debt.

If they fail to settle their tax obligations or make payment arrangements within a specified period, the taxman warned that an imminent civil judgment will be issued against them.

These notices, sent by SARS Debt Management, appear to focus on more recent trust debt for now. However, once received, time is of the essence.

SARS has consistently emphasised the need for trusts to comply by ensuring that all tax returns and outstanding liabilities – both current and historical – are up to date.

After years of perceived leniency towards trusts, this shift toward filing civil judgments to recover tax debt marks a significant development that trusts and trustees should take seriously.

Tax Consulting South Africa’s head of tax controversy and dispute resolution, André Daniels, stressed that these notices are more serious than they may initially appear.

“When you reach this stage, SARS only needs to provide the court with a 2- or 3-page debt management certified statement of taxes due and payable, including interest and penalties,” he said.

“The registrar or clerk of the court can rubber-stamp the statement, giving it the effect of a civil judgment issued by the relevant court.”

While it may seem harsh, this is in line with the powers granted to SARS in the Tax Administration Act (TAA), Part B of Chapter 11, which deals with the judgment process.

As per this section, if a person has an outstanding tax debt, SARS is required to give them at least 10 days’ notice.

After that, they may file with the clerk or registrar of a competent court a certified statement setting out the amount of tax payable and certified by SARS as correct.

“SARS is not required to give the taxpayer prior notice under subsection (1) if SARS is satisfied that giving notice would prejudice the collection of the tax,” the section reads.

“A certified statement filed under section 172 must be treated as a civil judgment lawfully given in the relevant court in favour of SARS for a liquid debt for the amount specified in the statement.”

Clear message for trusts in South Africa

Daniels said it is important to adhere to SARS correspondence regarding outstanding debt, make full use of the grace periods provided by the tax authority, and implement measures to address the tax liability.

Receiving a final letter of demand means leniency is coming to an end, and taxpayers should act immediately to avoid SARS collection steps, he said.

In a final letter of demand, the revenue service affords the taxpayer the opportunity to apply for one of the following –

• Payment in instalments if unable to pay the full amount once-off
• Suspension of debt where the taxpayer has or intends to submit a formal dispute
• Compromise of a portion of the tax, which will mean a higher return to the fiscus than liquidation, sequestration, or other collection measures

As such, SARS also clearly warns that failure to comply with the final demand may result in the appointment of third parties to withhold funds on their behalf.

Alternatively, it may lead to a civil judgment, in which case a warrant of execution may be issued for the Sheriff to attach and sell assets of the indebted taxpayer.

According to Daniels, there are many cases where SARS even follows up with a “courtesy request” as a reminder for outstanding debt.

This shows SARS’ leniency and encourages trusts to comply with and regularise their tax affairs before opting for a civil judgment.

On 9 February 2026, after years of addressing historic non-compliance among trusts, SARS announced that it had issued final demands to trusts that did not submit annual tax returns for the 2024 and 2025 years of assessment.

It warned recipients to take steps to correct non-compliance and avoid penalties. The tax authority appears to be focusing on recent trust tax debt rather than historical liabilities.

Presumably, SARS views it as low-hanging fruit and more readily recoverable than amounts outstanding for many years, Daniels explained.