SARS’ RIGHT TO LIQUIDATE A TAXPAYER TO RECOVER DEBT WHERE AN ASSESSMENT IS UNDER APPEAL SETS IMPORTANT PRECEDENT

Pretoria, Friday 16 October 2020 - The South African Revenue Service (SARS) welcomes the North High Court decision in the matter between the Commissioner for the SARS and Zikhulise Cleaning Maintenance and Transport Service on 14 October 2020. A final liquidation order was finally issued against a company who was placed in provisional liquidation in 2018. The company through its representative, Ms Mkize, opposed the granting of a final order. The company attempted to show that it met the solvency test by disputing its debt to SARS. The Judge relied on SARS version of the company’s indebtedness and confirmed that the company was factually and legally insolvent.
 
The judgment reaffirmed SARS’ right to liquidate a taxpayer where an assessment is under appeal. The judge confirmed when it is just and equitable to liquidate a company and made numerous references to the company’s behaviour, specifically ceding State tenders to the detriment of its creditor SARS, and benefitting from State funding yet avoiding its tax obligations.
 
This precedent-setting judgement is important in a number of ways. It empowers SARS to act decisively against a taxpayer who attempts to circumvent its fiscal obligations by using the court process to restrict SARS from collecting outstanding debt. While SARS will always respect the right of taxpayers to approach the courts to seek relief, it will oppose any such court action if it is vexatious and intent on stalling the debt collection process.
Commissioner Edward Kieswetter expressed SARS’ unyielding commitment to enforce compliance against taxpayers who abuse the legal process to avoid their obligations.
 
“SARS will act within the law and will pursue without fear or favour any taxpayer who is bent on evading their legal obligations,” he said.
 
He further stated that it was unconscionable that taxpayers, especially those that have made their fortunes through government tendering, would through their carefully calibrated actions, seek to deprive poor and vulnerable South Africans who depend on state-funded social grants by not paying their taxes.
 
The SARS Commissioner said SARS would at all times work towards finding a mutually acceptable solution for taxpayers by providing certainty and clarity as well as making it easy for taxpayers to meet their obligations. However, SARS would also oppose to the highest court of the land any action that is ill advised- and ill construed. This more so, if it is pursued by people who brazenly and ostentatiously defy the law. 
 
“This victory must send a clear and unambiguous message to all citizens that SARS will make it costly and hard for taxpayers who choose the path of non-compliance.”

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