Ignoring your tax obligations is no longer just a compliance risk. It can quickly escalate to criminal charges – and the consequences may extend beyond the company to the individuals responsible for its affairs.
Jashwin Baijoo
Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA.
South Africa’s tax enforcement landscape is sending an unmistakable message to directors, business owners and representative taxpayers: failure to submit tax returns is not an administrative inconvenience to be ignored. It can constitute a criminal offence, with personal liability consequences that extend well beyond financial penalties.
The recent conviction of former Telkom chief executive Sipho Maseko provides a powerful illustration of this principle. On 9 October 2026, Maseko was convicted in connection with the failure of five companies under his directorship to submit 85 tax returns to SARS.
The companies identified in media reporting were One Fountain Properties, One Fountain Industries, One Fountain Capital, Afrifund Advisory Services and Afrifund Investments. The conviction was secured in his representative capacity as a director of those companies.
The significance of this case extends beyond the profile of the individual involved. It reinforces a fundamental principle of South African tax administration: the corporate veil should not be mistaken for immunity from criminal accountability.
The company may be separate, but accountability can be personal
A common misconception among business owners is that tax compliance rests exclusively with the company, its finance department or its external tax practitioner. In practice, directors and representatives who carry responsibility for a business’s tax & financial affairs cannot afford to treat compliance as somebody else’s problem.
The Tax Administration Act 28 of 2011 (TAA) establishes a framework of obligations and offences designed to promote compliance and protect the integrity of the tax system. Section 234 specifically addresses criminal offences relating to non-compliance with tax legislation, including failures to submit returns where the applicable statutory requirements are met.
The implications are serious. Under section 234(2)(d), a person who wilfully or negligently fails to submit a return or document required under a tax Act may commit a criminal offence. Upon conviction, the applicable penalty includes a fine or imprisonment for a period not exceeding two years.
This is not simply a question of whether the company has paid its taxes. Filing obligations exist in their own right, and a failure to submit a required return can trigger enforcement even where a taxpayer believes that no tax is ultimately payable.
For directors and representatives, the lesson is clear: oversight of tax compliance must be an active governance responsibility, not a box-ticking exercise delegated without supervision.
SARS’s stance is clear from these excerpts from the Notice of Personal Liability:
Unlike the pre-COVID era these representatives must err of 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.
SARS and the NPA: Enforcement is no longer merely theoretical
SARS and the National Prosecuting Authority (NPA) have demonstrated their willingness to pursue criminal proceedings against taxpayers who fail to meet their statutory obligations.
The message from the authorities is increasingly difficult to ignore: persistent non-compliance can move from reminders and administrative interventions to criminal investigation and prosecution.
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:
Excerpt from the Notice of Personal Liability issued by SARS
Directors should therefore not assume that an outstanding return will remain an unresolved administrative matter indefinitely.
Non-submission is not a harmless omission
There is a tendency to distinguish between tax evasion and the failure to submit returns, with the latter sometimes viewed as a relatively minor technical lapse.
That distinction can be dangerously misleading.
A failure to submit a return deprives SARS of information necessary to administer the tax system effectively. It may also prevent the proper determination of a taxpayer’s tax position and delay the collection of revenue due to the fiscus.
The TAA provides for criminal consequences for qualifying non-compliance, separately from the administrative penalties that may apply to outstanding returns. SARS may also pursue other lawful enforcement measures where the circumstances warrant them.
A failure to file should therefore never be dismissed as a matter that can simply be dealt with when time permits.
Directors must take ownership of tax governance
Section 180 of the TAA empowers SARS to hold third parties personally responsible for a company’s tax debt if:
Where a tax debt exists, this would include liability for capital sums due, as well as related penalties and interest.
Holding an official financial title within the company is not necessary. Merely being involved in financial decisions can make an individual a target. Directors, shareholders, financial officers, and even informal advisors can be held liable if their actions (or inaction) contribute to tax non-compliance.
The cost of non-compliance extends beyond the balance sheet
The consequences of criminal tax non-compliance are not confined to fines or the immediate cost of correcting outstanding returns. Criminal proceedings can affect an individual’s reputation, professional standing and commercial relationships.
A conviction can carry a criminal record, while imprisonment remains a potential consequence under the applicable statutory provisions.
For businesses, these risks can undermine stakeholder confidence and distract management from the commercial objectives that drive growth.
Tax compliance should therefore be viewed as an essential component of risk management, sound governance and business sustainability.
What should non-compliant taxpayers do now?
The practical message is urgent: do not wait for a final demand, Civil Judgement or Notice of Personal Liability, before addressing outstanding tax obligations.
Taxpayers and their representatives should undertake an immediate compliance review, identify all outstanding returns, verify the accuracy of the underlying information and submit the required declarations through the appropriate SARS channels.
Where the tax debt owed is in the millions, SARS are often aggressive in collections, and having an attorney with trial advocacy experience under their belt gives you an undisputed edge in negotiating on the legal papers submitted.
Should the taxpayer intend to dispute an assessment or penalty, the appropriate dispute-resolution procedures should be considered. Any potential criminal exposure should be addressed with suitably qualified professional advice.
SARS’s crackdown, by extension, means that those involved in financial decisions, even informally, could face devastating financial and legal consequences.
Where there is a significant risk of SARS pursuing personal liability, or a large tax debt due under the name of a company that requires settlement, legal professional privilege is essential in all SARS engagements. Consulting with a tax attorney to understand potential exposure and implement a proactive strategy is crucial, as well as a compliance “health-check” on any “linked entities”.
If a personal liability notice has already been issued, seeking legal advice is critical to protecting one’s assets, including liquid funds, and mitigating the risk of further prosecution by SARS. This is not the time to bury your head in the sand; being proactive rather than reactive could be the difference between financial ruin, and business recovery!
