DIRECTORS AND FINANCIAL MANAGERS ON THE LINE FOR COMPANY TAX DEBTS
Are you the director or financial manager of a company? Are you certain your company is 100% compliant with SARS?
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Directors, public officers and persons involved in the financial affairs of companies found to be non-compliant with their taxes, are right to feel uneasy, as the Commissioner has made it clear in October that they will amend the wording of in current tax legislation to remove the term ‘willfully’, thereby removing the obligation on SARS to prove intent before a tax payer can be found guilty of one of these offences. It is clear that SARS will leave no stone unturned in the pursuit of revenue collection, and there is a legitimate expectation that he will come after such persons for unpaid company tax debts, especially in the case of negligent non-payment of tax.
SARS has wide-ranging powers which allow for the collection of company tax debts from certain company representatives in their personal capacity. Section 153, read with sections 154 and 155, of the Tax Administration Act place personal liability on the “representative taxpayer”, which is any person who is responsible for paying the tax liability of the company as an agent. This expressly includes the public officer of the company insofar as the company’s income tax debts.
Section 180 of the Tax Administration Act further places personal liability on any person who controls or is regularly involved in the management of the overall financial affairs of the company, where the person’s negligence or fraud resulted in the failure by the company to pay its tax debts.
This provision does not specifically presuppose the existence of formal responsibility in respect of the finances of the company, but instead merely requires that a person exercise a degree of control over or regular involvement with, its overall financial affairs. The ambit of section 180, therefore, also relates to those persons who exerted a form of pre-emptive or informal control over the financial affairs of the company, which may include shareholders, directors and other persons who were factually involved.
This is certainly not the time to test SARS, who have once again demonstrated that it is under a strong, competent leadership, determined to increase revenue collection, by any means necessary.
Our multidisciplinary team of tax attorneys and chartered accountants have a proven track record at taking on SARS toe-to-toe successfully and have assisted many companies to become tax compliant and avoid personal liability. We guarantee legal professional privilege on your matter and follow a strict legal and compliant approach with solution-based thinking.