South African taxpayers hit with frozen bank accounts and SARS deductions

South African taxpayers are increasingly being hit with frozen bank accounts and SARS deductions, often before they fully understand what has happened or what rights they still have.

Unicus Tax Specialists SA’s founder, Nico Theron, said that many individuals, employers, small businesses and larger companies do not realise SARS collection action can sometimes be challenged.

In some cases, a collection action can even be reversed. “The mistake taxpayers make is assuming that because SARS has taken the money, they must have been entitled to do so,” Theron said.

SARS has significant powers to collect outstanding tax debts, which can have a dire effect on salaries, business bank accounts, or funds held by a third party on behalf of the taxpayer.

For many taxpayers, the most invasive form of collection is the seizure of funds directly from a bank account. By the time the taxpayer becomes aware of the issue, the cash flow damage may already be immediate and severe.

In practical terms, this can include situations where a bank account is debited or frozen as part of an SARS collection action, or where an employer is instructed to deduct money from a salary.

External debt collectors may also demand payment on behalf of the revenue service. These collection strategies continue even where the statutory requirements have not been properly met

While SARS has far-reaching powers, Theron stressed that it is not above the law just because it is collecting taxes. “Its collection powers still have limits, and SARS has to act within those limits.”

According to Theron, South African taxpayers often misunderstand what happens after SARS has already collected money.

“Taxpayers often assume the money is gone and that their only option is a slow complaint or escalation process. While that is sometimes true, it isn’t always the case.”

The wrong response to SARS deductions can cost taxpayers dearly

According to Theron, if a SARS collection action is unlawful, the right intervention can stop further action and may even result in SARS paying back money that has already been taken.

This distinction is important because collection disputes are often not solved through the ordinary objection process.

A taxpayer may be able to object to an assessment, but the collection process itself may require a separate, urgent strategy.

“If the problem is unlawful collection action, the taxpayer must respond to that problem directly,” Theron said. “The wrong procedure can waste days that the taxpayer simply does not have.”

While SARS escalation channels and complaints may have their place, they are often too slow where salaries, payroll, suppliers, debit orders or business operations are already under pressure.

In the right case, Theron noted that a properly framed legal intervention can produce a much faster result for taxpayers.

With the help of competent tax professionals, unlawful SARS collection action can be stopped, and millions of rands can potentially be released or recovered.

“If SARS has acted outside the law, the aim is simple: stop the collection, reverse the damage and recover the money. We’ve seen matters change within days once the legal issue is identified and raised properly.”