Authored by: Jean du Toit, Head of Tax Technical at Tax Consulting SA 

It seems the SARS Commissioner had an epiphany – make an example of delinquent taxpayers so others will fall in line. Apparently, following SARS’ media briefing on 30 July 2020, this is a deterrence tactic SARS will use in the coming filing season.

Why have SARS never done this before?
Surely, this is not new wisdom; why have SARS never done this before?

We have asked this question ourselves many times – with many reports of tax evasion in the media, including some high-profile unanswered cases emerging from the multitude of commissions of inquiry, why have we not seen anyone in handcuffs?

The answer may be what many suspects, which is that SARS is sitting idle.

Or, perhaps, SARS is in fact hard at work rounding up tax dodgers but there is no way of telling because of SARS’ devotion to the secrecy provisions in the Tax Administration Act.

These provisions can be found in Chapter 6 of the Tax Administration Act and generally dictate that SARS must preserve the secrecy of taxpayer information.

Lest we forget, with the current Commissioner at the helm, on the strength of these provisions, SARS staunchly refused to share the tax records of former president Jacob Zuma with the Public Protector.

So, what has changed?

Is SARS allowed to “name and shame”?
There are very limited circumstances where taxpayer information may be disclosed, such as divulging the information in terms of a court order, if the taxpayer gives written consent or where a specific Act expressly overrides the secrecy provisions.

Section 74, however, determines that the Commissioner may publish the name of a taxpayer where they are convicted of a tax offence.

For those who believe a “tax offence” is something committed by complete delinquents, think again. Tax offences range from the failure to submit a return or simply failing to notify SARS of a change in your registered particulars, to more serious transgressions relating to tax evasion.

When publishing the offender’s name, the Commissioner may also disclose the particulars of the offence and the fine or sentence imposed.

In other words, unless any of the exceptions apply (which is unlikely), SARS may only name and shame you if you are convicted of a tax offence.

All bluff and bluster?
If the naming and shaming will simply involve publishing the names of taxpayers who failed to submit their returns, then this is not a novel idea.

SARS did this in 2018 where it published several names of taxpayers, including some well-known public figures, most of whom had to pay relatively modest fines. This initiative seemingly had little effect.

The problem is that unless there is a legislative amendment that would make the secrecy provisions less strict, SARS must first obtain a conviction before it can publish an offender’s name.

For more serious tax offences in particular, this will take time.

So, unless SARS recently secured a surge of convictions which are yet to be published, it is unlikely that the Commissioner’s briefing signals a watershed moment.   

Any initiative that would improve the tax system’s deterrence factor is a welcome development, but a handful of taxpayers who are given a slap on the wrist will not do the trick.

If SARS wants to send a message that carries any weight, we need to see some tax dodgers in orange jumpsuits.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.

For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa

“The recent announcements by the Department of Home Affairs are a welcome relief to the expat community and the international mobility industry,” says Moeketsi Seboko, Immigration Manager at Xpatweb.

Home Affairs Minister Mr Aaron Motsoaledi delivered the Department’s 2020/21 budget speech during a virtual debate before the Portfolio Committee on Home Affairs on 22 July 2020.

His speech addressed the revision of the Electoral Act, the signing by President Ramaphosa of the Border Management Authority Act, the support for economic recovery, war on corruption, and extension of validity of visas.

Border Management Authority Act
President Ramaphosa signed the Border Management Authority Act into law on 21 July 2020, which took immediate effect. This act addresses the need for an integrated and well-coordinated border management service that ensures safe travel and promotes licit trade.

The Act will see the various independent agencies currently managing SA’s borders falling under a single authority: the Border Management Authority.

This means the country’s borders now have an overarching law that regulates how they are controlled and managed. The Minister said the Department will begin implementing the Border Management Authority Act requirements immediately.

Expats May Travel Under Special Conditions
The Minister also confirmed that the Department is currently processing visas under special lockdown regulations. This will allow highly skilled expats to enter the country and help with the rejuvenation of the economy.

“We have seen some clients who are categorized as critically-skilled expats being authorised to enter the Republic and others being granted visas to travel to the country to take up essential work. All this taking place during the lockdown. So we are grateful to the Department for their efforts to keep the economy running,” says Seboko.

Stamping Out Corruption
The Minister said the Department is continuing to fight systemic and entrenched corruption by some officials that has historically plagued it. He called the three main culprits - bribery, fraud and corruption - “the terrible triplets”.
He highlighted the recent discovery of a fraudulent visa scheme, perpetrated by Home Affairs’ first Secretary for Civics and Immigration Services at its Namibian mission.

The official was found to be selling visas to non-qualifying people in Pakistan and Bangladesh, enabling them to gain access without even travelling to Namibia to obtain the documents.

This was just the tip of the ice berg, he told the Portfolio Committee.

The Minister also confirmed that the Department had revoked 100 visas obtained in this manner. In addition, there have been recent reports of officials being arrested from other offices of the Department for selling birth certificates, IDs, visas and other documents.

“With more of these anti-corruption measures taking place, we hope to someday see a corruption-free Department of Home Affairs,” comments Seboko.

Foreign nationals stranded in South Africa and unable to travel back to their home countries can breathe a sigh of relief.

In his address, the Minister said that Home Affairs will extend all permits and visas that were due to expire in the COVID-19 lockdown from 31 July 2020 to 31 October 2020. He further reported that he will be signing a Government Gazette to amend the current regulations, definitely giving effect to this before 31 July 2020.

“We are aware of the fears among those stranded in-country on the legality of their status after 31 July 2020. One thing is certain though - visas will be extended until 31 October 2020,” says Seboko.

​However, those affected will have to wait for the amended regulations to be Gazetted to know if submission of visas will be allowed for those working, studying or accompanying spouses in the Republic.

Closing Remarks
Seboko believes that the address by the Department was positive overall and welcomed its intent. “One can only hope that Home Affairs succeeds in overcoming challenges in its obligations to the citizens of this country and foreign nationals legally admitted in the Republic,” he concludes.

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Xpatweb:
HOLISTIC EXPATRIATE SOLUTIONS
The Xpatweb group has been in existence for over 14 years and includes over 90 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents.

For more information on Xpatweb please visit:
Website:  http://www.xpatweb.com/
LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/
Facebook:https://www.facebook.com/xpatweb/

Authored by: Jean-Louis Nel, tax attorney at Tax Consulting SA
 
Earlier this month, the Pretoria High Court granted a small business owner an urgent basis for relief against the South African Revenue Service (SARS) who depleted his bank account without following due process. The court ordered SARS to set aside the third appointment of Absa who collected R1.3-million on behalf of SARS from the taxpayer’s bank account in terms of Section 179 of the Tax Administration Act (TAA).
 
The Court further ordered SARS to repay the amount collected from the taxpayer’s bank account, together with the costs of the application on a punitive scale within three business days after granting the order. This occurred shortly after the SIP Project Managers vs SARS Commissioner case whereby the court ruled against SARS in respect of third-party appointments to collect outstanding tax debts.
 
Case background
In this case the taxpayer was left with a frozen and empty bank account without any prior notification from SARS. When he realised SARS had collected the full balance of his bank account, he immediately contacted his tax advisor to enquire about his tax compliance.
 
The tax advisor engaged with SARS, advising them of the situation and what detrimental financial effect their conduct has had on the taxpayer where it was apparent that there was no tax debt. The taxpayer had already closed two of his three shops in Johannesburg due to the collection proceedings.
 
SARS undertook to investigate the matter but there was no sign of a quick resolution to the issue. Due to the urgency of the matter the taxpayer instructed his attorneys to approach the Pretoria High Court on an urgent basis. At the time of urgent application and prior to the third-party appointment by SARS, the taxpayer’s affairs for both Income Tax and Value Added Tax (the only two taxes he was registered for) were fully compliant. In fact, it materialised that SARS owed the taxpayer a nominal amount.
 
The correct process
In these difficult fiscal times, SARS is expected to exercise its considerable power to collect the correct amount of taxes to the benefit of the fiscus. However, this does not mean that rogue officials can act outside the law and appoint banks as collection agents, as they see fit.

There are clear rules that must be followed, and this is to the benefit of society, which requires efficient revenue collection, but not abuse of SARS power.
 
In terms of the TAA, the taxpayer has to be notified of any outstanding debt and the subsequent appointment of a third party, such as his bank, to collect the tax if no action is taken by the taxpayer to regularise their tax affairs. If SARS does not properly issue the final letter of demand it is precluded from taking collection steps in the normal cause. It is a peremptory requirement in the TAA for SARS to issue a final letter of demand to the taxpayer, ten (10) business days before SARS can appoint a third party to collect outstanding debt and this was recently also confirmed in SIP Project Managers-judgment.
 
It is imperative that a taxpayer ensure that their rights are protected, especially during the unprecedented times of COVID-19, where we have seen that SARS has adopted a firmer position in collecting outstanding debt.
 
SARS oversight
There remains an unbalanced position in our tax administration law, which does not allow SARS officials to be held accountable for their actions. The Tax Ombud’s powers are restricted, as can be seen from their latest report where SARS appears to have flat out refused the Ombud to interview the implicated SARS officials. It is also unclear whether the Commissioner is acting against his officials internally.
 
For now, a taxpayer’s only remedy appears to approach the High Court for relief. The Pretoria High Court has in both matters before Acting Judges Lingenfelder and Avvakoumides, respectively protected taxpayer’s Constitutionally enshrined rights against SARS.

Authored by: Jashwin Baijoo, Tax Attorney at Tax Consulting South Africa 
​
Everybody knows SARS is under collection pressure and they have grown rather fond of appointing 3rd parties, such as banks, to recover outstanding tax debts directly, which leaves taxpayers stunned.

This is a quick and effective debt recovery measure, but the question is what about the legality of such appointment?
These appointments may result in taxpayers suffering severe financial hardship, but worse still, it appears taxpayers have very limited options to find redress where a SARS official reaches into their bank account by means of an unlawfully executed process.

As an admitted attorney, a fair portion of my early career was spent in Debt Collection and Litigation, and you learn first-hand that unlawful appointments and acts with no integrity, which have far-reaching implications for the debtors, can only be dealt with in a decisive manner.

But what should you concretely do when your bank balance has suddenly disappeared? You can try and resolve this by making contact with SARS’ Debt Department or airing your grievances to the contact centre, but you may find SARS is less effective in returning your money than the kind of effectiveness displayed in accessing your bank account.
​
Harsh as it may be, where you urgently want the transaction reversed, your surest recourse is a High Court application.

Case in point is the recent judgement of SIP Project Managers (Pty) Ltd v The Commissioner for the South African Revenue Service (Case Number 11521/2020) which has reaffirmed faith in the judicial system when it comes to debt collection rules, by showing no fear or favour in upholding taxpayers’ rights.


The case concerned facts where SARS took R1 262 007.00 from the company’s bank account, without following due process.

The High Court declared SARS’ 3rd party appointment of the bank null and void. It then proceeded to sanction the premature issuing of a Final Demand by SARS, declaring such issuing as unlawful and ordering SARS to repay the funds as were unlawfully obtained.

This case again illustrates that you need to know your taxpayer rights as protected by the law. The law is there for a reason, and when it comes to debt litigation, the courts of South Africa act both swiftly and decisively to ensure the protection of taxpayers against the anarchy created by the unfettered abuse of power.

For a SARS Letter of Final Demand to be valid, there must be delivery of the letter to the taxpayer.

The letter must contain both the recovery steps which SARS is permitted to take, as well as the relief measures available to the taxpayer. Should any of these requirements be lacking, the Final Demand will be considered invalid.

Any subsequent collection steps implemented by SARS, by virtue of non-compliance with the Final Demand requirements, may be deemed unlawful, including the taking of the taxpayer’s funds directly from the bank via a 3rd party appointment.

We have seen a significant increase in SARS using banks to collect alleged tax debts. In order to protect yourself from SARS, it remains the best strategy that you always ensure compliance.

Where you find yourself on the wrong side of SARS, there is a first mover advantage in requesting a suspension of payment, protecting your bank balance whilst the matter is resolved. However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.
​
For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa
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