SARS going after big hitters

In the past year, the South African Revenue Service (SARS) has targeted a long list of prominent businesspersons and local celebrities in its campaign to eradicate non-compliance in the country.

This is according to Tax Consulting SA’s Associate Director and Head of Strategic Engagement and Compliance, Jashwin Baijoo.

Baijoo said the latest name added to SARS’ non-compliance hitlist is that of controversial businessman Bongani Mpeluza.

Mpeluza is currently facing the daunting prospect of a court judgment that could force the sale of his assets if he fails to settle a staggering R27 million tax debt. 

“This situation serves as a chilling reminder of the severe consequences that can arise from unresolved tax obligations, regardless of one’s station in life,” Baijoo warned.

Mpeluza joins the long list of prominent businesspersons and local celebrities, such as racing driver Jimmy Auby, cricketer Kagiso Rabada, and author MaMkhize, who must now “pay the piper” for years of tax non-compliance.

Baijoo said their offences range from non-submission of tax returns to non-payment of tax debts due to SARS.

He explained that a tax debt usually arises out of negligence. However, there are instances where it is a case of intentional non-payment or further compliance infringements.

It is important to know where a tax debt can originate from. The usual culprits are:

• Administrative penalties on late or non-submission of tax returns
• Estimated assessments resulting from a failure to submit tax returns
• The submission of tax returns without any payment thereon
• Partial payment of a tax liability or unpaid interest and penalties

Furthermore, Section 234 of the Tax Administration Act (TAA) outlines the acts and omissions that SARS considers criminal offences relating to non-compliance with tax legislation. 

This section states that any person who wilfully commits one of the listed acts or wilfully or negligently fails to act may be liable to a fine or imprisonment of up to 2 years.

“This is only the tip of the iceberg, however, as Section 235 of the TAA goes even further, speaking to tax evasion and obtaining undue refunds through fraud or theft. This comes with a 5-year potential imprisonment,” Baijoo said.

“When you venture into the realm of navigating your complex and high-value SARS Tax Debt, essentially one of the most important decisions you will ever take, the integral starting point is ensuring your chosen representative provides you with legal professional privilege on all sensitive information shared.”

Baijoo said that SARS’ Debt Management Team, in conjunction with either the SARS Asset Forfeiture Team or the Sheriff of the Court, are empowered to initiate a number of collection proceedings against the non-compliant taxpayer, including:

• Collection of outstanding tax debt via a third-party appointment
• Issuing of a judgment and credit bureau blacklisting
• Attachment and auction of taxpayers’ assets
• Asset repatriation of any offshore interests
• Forced liquidation/sequestration of the taxpayer’s estate

Fortunately, he said a taxpayer can make a Request for Suspension of Payment, with the assistance of a tax attorney, when they have received a Letter of Demand from SARS that they intend to dispute, which automatically suspends the tax liability.

Baijoo said that where the tax debt owed is in the millions, SARS is often aggressive in collections, and having an attorney with trial advocacy experience under their belt gives you an undisputed edge in negotiating on the legal papers submitted. 

Beyond this, where the correct legal course of action per the Tax Administration Act is followed, you will not be subjected to funds withdrawn from your bank account without your consent.

In addition, section 256(3) of the TAA enables taxpayers who have successfully concluded either a Deferral of Payment or Compromise of Tax Debt agreement to apply for a compliant TCS pin despite their tax debt.

“In the end, total tax compliance is the ultimate goal, be it through the rectification of an error by SARS or securing a settlement which is more affordable in a given instance,” he said.