SARS’ Enforcement Actions to Recover Outstanding Taxes

The South African Revenue Service (SARS) has intensified its efforts to recover outstanding tax debts, implementing stringent measures against non-compliant taxpayers. Morné Janse van Rensburg, Managing Director at Hobbs Sinclair Advisory, has observed a notable escalation in SARS’s assertive approach and enforcement actions, including criminal investigations, the institution of criminal proceedings, search and seizure processes, direct deductions from bank accounts, and the attachment of property.

“We’ve observed SARS meticulously scrutinising tax returns and conducting audits on flagged taxpayers,” says Janse van Rensburg. “In one instance, a discrepancy which led to an audit for the 2024 tax year prompted SARS to re-examine and audit tax returns submitted and settled up to 11 years prior.”

Enforcement Actions by SARS

SARS has an array of enforcement actions at its disposal, which it is increasingly utilising to recover outstanding tax revenue. These measures include:

• Deducting funds directly from a taxpayer’s bank account.
• Opening criminal investigations.
• Laying criminal charges for non-compliance, evasion of tax, or obtaining undue refunds by fraud or theft.
• Conducting lifestyle audits on flagged taxpayers.
• Search and seizure processes.
• Reopening and re-auditing past tax returns, even those previously approved and settled.
• Imposing penalties and interest on outstanding amounts.
• Obtaining preservation orders from the High Court to attach assets.
• Institution of sequestration, liquidation or winding-up proceedings.

Managing Outstanding Tax Obligations

Taxpayers who are unable to settle their tax debts in full are encouraged to proactively engage with SARS to arrange payment plans. SARS provides various avenues for taxpayers to manage their outstanding tax obligations, including options to defer payments or settle debts in instalments. Additionally, the Voluntary Disclosure Programme (VDP) allows non-compliant taxpayers to come forward and rectify their tax affairs, potentially reducing penalties. However, these applications can be complex, requiring careful preparation and accurate submission. Seeking assistance from a tax expert can help ensure that all necessary disclosures are accurately presented, and that the application aligns with SARS’s requirements.

It is important to note that interest will continue to accrue on unpaid amounts, and failure to comply with agreed repayment terms could result in SARS resuming enforcement actions, such as asset seizures, bank account deductions, or even legal proceedings.

“We’ve seen first-hand that these are no longer empty threats from SARS and ignoring tax obligations can lead to severe consequences,” Janse van Rensburg warns. “SARS has the authority to collect outstanding taxes through third-party appointments, directing employers or banks to pay on behalf of the taxpayer. Unpaid debts may also result in judgments, asset attachments, criminal prosecution and potentially sequestration or liquidation proceedings.”

Taxpayers should be aware of the deadlines to ensure compliance and avoid penalties. “Timely and accurate submission of tax returns is essential to maintain compliance and avoid unnecessary penalties,” Janse van Rensburg strongly advises. “Taxpayers should ensure all their affairs are in order well before the deadlines. For more complicated tax matters, seek expert assistance to ensure that everything is handled correctly and in compliance with SARS’ requirements.”