Tax compliance is crucial: lessons from the Supreme Court's ruling

A RECENT ruling by the Supreme Court of Appeal has delivered a sharp message to taxpayers: ignoring your tax obligations and later blaming your accountant will no longer suffice.

- WILLEM J. OBERHOLZER

In Ntayiya v South African Revenue Service (848/2023) [2025] ZASCA 183, the court reaffirmed Sars' authority to impose some of the harshest penalties available in South African tax law - and held that taxpayers cannot evade accountability by claiming that professional advisors simply got it wrong.

The case concerned a Mtha-tha-based attorney who submitted six years of nil personal income tax returns, all while earning income and purchasing luxury vehicles. When Sars uncovered the mismatch between his filings and bank records, it imposed a revised tax assessment, including a 150% understatement penalty for intentional tax evasion. It also taxed the private use of motor vehicles after the taxpayer failed to provide evidence that he used them exclusively for business.

The taxpayer initially sought to challenge the validity of the assessments. But when the matter reached court, he withdrew the relief that would have attacked the foundation of Sars' actions. With that shift in strategy, the assessments became final and binding in terms of the Tax Administration Act - leaving the remaining arguments on penalties and motor vehicle taxation effectively toothless. After losing in the High Court, he attempted to undo the enforcement action by claiming repayments from Sars. The High Court dismissed the matter, and the SCA has now done the same.

While the case originated from a factual dispute between a single attorney and the tax authority, its impact is far broader.

A reminder of taxpayers’ duties

At the heart of the judgment lies a principle that South Africa's courts are making increasingly clear: tax compliance is not optional, particularly for sophisticated taxpayers such as legal and accounting professionals.