How Sars is enforcing personal liability for tax debts

SARS is leveraging its powers under the Tax Administration Act, which provides for instances in which the Directors, Public Officers, or other representative taxpayers can be held personally liable for a company’s tax debt!

- JASHWIN BAIJOO.

Unlike the pre-COVID era, these representatives must err on the side of caution, as Sars has rapidly upskilled its Debt Management Team for swift and potentially fatal collections, from your bank account, or even sequestration of personal estates.

Mismanagement burden to be discharged

Although aggressive with their collections, Sars does, in the Notice of Personal Liability, afford the implicated individual an opportunity to contest their personal liability. This is, however, not the fire escape it may sound like, as proving no personal liability entails what could be construed as an admission on why the taxes were not paid, and what better use were the funds put to.

In discharging the burden of personal liability, certified bank statements must be submitted to Sars, across all accounts. This includes those of the representative taxpayer themselves. In conjunction with this, the last 5 years’ worth of Annual Financial Statements and Management Accounts must be submitted to Sars, confirming there was no mismanagement of funds or improper performance of financial duties!

Where there is uncertainty as to who can be held personally liable, a distinct legislative guideline is that individuals involved in the financial management of a company, even informally, could find themselves personally liable for its unpaid tax debts. Sars’ broad powers extend beyond just the taxpayer, potentially implicating directors, shareholders, and other key individuals in a company’s financial affairs.

Personal Liability Under Section 180 of the Tax Administration Act (“the TAA’)