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04 June 2015 – SARS Enforcement Operations for May 2015

04 June 2015 – SARS Enforcement Operations for May 2015

Pretoria, 4 June 2015 – The South African Revenue Service (SARS) is providing an update to the media and the public on its operations to combat crimes such as fraud and abuse of the tax and duty system for the month of May 2015.
SARS will combat any form of corruption, fraud and abuse of the tax/duty systems. The following cases can be reported for May 2015:
  1. On 21 May Customs officials detained and secured a large consignment of cooking oil from the premises of a scrapyard in Langlaagte, Johannesburg. It was established that the 60 tons of oil formed part of a consignment of 450 tons of fish oil that was donated by the US government agency US Aid to the World Food Programme in Blantyre, Malawi. The investigations are continuing to trace the balance of the oil, as it is suspected that the remaining oil may have been stolen and diverted into the local market. Although SARS was not prejudiced as no duty was payable on the importation of the oil, SARS faces VAT prejudice if diverted goods are sold locally. The City of Johannesburg Environmental Affairs Department Officials and SAPS also participated in the intervention.
  2. A Chinese national was arrested for possession of illicit alcohol to the value of R4.9 million, detained during a raid at a Nigel bottle store on 23 May 2015. Customs officials found a large volume of duty free alcohol stock on the premises, believed to have come from a duty free store in Durban. It is suspected that the liquor had been hijacked from a truck on Friday 22 May 2015, and delivered to the bottle store. The suspect faces charges of possession of suspected stolen property. The removed alcohol included:
    • 273 cases of Johnny Walker Red Label with 40% plus spirits;
    • 87 cases of  Amarula Spirit;
    • 100 cases of Grants Whisky with 40% plus spirits. (Alcohol with 40% spirits content is not permitted in the Republic.)
A large quantity of other alcohol was also detained pending production of documentation.

Administrative enforcement cases

The Tax Administration Act (TAACT) bestows on SARS the authority to execute certain enforcement powers administratively. A number of noteworthy administrative outcomes for the month of May are reported below.
  1. On 28 May 2015 the Supreme Court of Appeal (SCA) in Bloemfontein confirmed a preservation order against Ms Candice van der Merwe. The Court also confirmed the appointment of a curator bonis to take control of her assets. Ms van der Merwe approached the SCA to appeal against an earlier decision by the Western Cape High Court disallowing a late application to appeal against the provisional preservation order that was granted in August 2013. The SCA dismissed the appeal with costs, including those of two counsel, because the breaches of the rules was of such a nature and the explanation offered so unacceptable and wanting that condonation was  refused, irrespective of her prospects of success on appeal.
  2. The final order for the winding up of the closed corporation Valinor Trading 142 (trading as Out of Africa Adventurous Safaris), was handed down in the Gauteng North High Court on 29 May. The entity is related to the Limpopo game farm owner who was arrested for alleged rhino poaching and related crimes in South Africa in 2010. SARS applied for the liquidation of the entity after obtaining a judgement for outstanding VAT debt of R93 million and outstanding income tax debt of R123 million, based on the inability of Valinor to pay its outstanding debt.
  3. Earlier this month, the Gauteng South High Court issued a warrant of execution for the collection of approximately R45 million from a Bedfordview businessman. The debt arose from assessments raised in 2007 for the tax years 2003 and 2004 and original assessments submitted by him.
  4. On 14 May 2015, the Durban High Court issued a writ on the moveable assets of a taxpayer who owes SARS approximately R58 million due to under-declaration of income and other inconsistencies in his financial statements.  SARS has consequently instructed the Sherriff to attach all his moveable assets at his residence in La Lucia, Umhlanga. SARS approached the High Court after issuing a final demand in October 2014, and not receiving any valid objection. Third party appointments to collect the debt were unsuccessful as the taxpayer allegedly changed his banking details.
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