Third-party appointments are only one part of Sars' debt-recovery toolkit. The revenue service also identifies civil court judgments, the attachment and sale of assets, asset-preservation measures and the sequestration or liquidation of estates as possible enforcement options, depending on the taxpayer's circumstances and the relevant legal requirements.

Sars may also pursue debts through external collection agencies. Its annual report records approximately R2-billion collected through outsourced debt recovery during 2025/26, alongside R20-million collected through the Special Expedited Compromises initiative for tax practitioners and R82-million through the Compromises Below R10-million Project.

These initiatives illustrate that Sars is pursuing a combination of negotiated settlements, operational improvements and compulsory recovery measures rather than relying on a single method.

The report further indicates that active recovery steps are being taken against R451-billion in gross receivables, although these debts are at different stages of the collection cycle and may carry different recovery risks.

In ensuring non-compliance is hard and costly, some of Sars’ key compliance drivers for the fiscal year are:

• Debt cash collections.
• Preventing impermissible and fraudulent refund claims.
• Voluntary disclosure interventions to regularise tax affairs.
• Countering syndicated tax and customs crimes, valuation fraud, and customs seizures.
• Applying data science and AI to identify and mitigate compliance risks to safeguard the fiscus.

That being said, Sars' enforcement powers are not unlimited. Taxpayers may have rights to object to or appeal assessments and, where the requirements are met, request a suspension of payment while a dispute is being handled. The report notes that payment cannot be enforced in cases where recovery proceedings have been suspended under section 164(2) of the Tax Administration Act, 28 of 2011.

The distinction between a disputed assessment, a debt subject to a payment agreement and an overdue debt available for enforcement is therefore crucial when assessing what Sars can lawfully recover.

With Sars' enhanced non-compliance detection capabilities and a sharp focus on both past and future non-compliance, correct tax and legal guidance has never been more critical. The most prudent approach to be taken, is to heed Sars’ warning that non-compliance will be both hard and costly for the offending taxpayer, with the Tax Administration Act offering up a laundry list of criminal offences for tax non-compliance.

Revenue collection improves, but the debt book remains a challenge

Echoing its strategic objective of making non-compliance hard and costly, interventions from Sars’ Compliance Programme generated a whopping revenue increased to R319.2-billion in 2025/26, up from R304-billion in 2024/25, representing growth of approximately 5%.

Sars also reported comparable cash collections from receivables of approximately R98-billion, compared with R95-billion in the previous year. Including Provisional Tax, total collections rose to approximately R110.5-billion.

These results reflect the contribution of targeted collection strategies, improved data analysis and a stronger focus on outstanding debt. Sars has also expanded internal debt-collection capacity and improved behavioural modelling, taxpayer segmentation and process automation.

The ability to recover longstanding debt, limit new arrears and distinguish collectible amounts from debt unlikely to be recovered will remain important measures of success.

What Options Are Available to Resolve Tax Debt

The figures send a clear message to individuals and businesses: outstanding tax debt should not be ignored.

Where a taxpayer simply cannot afford to settle their tax debt, it is crucial that the taxpayer approaches Sars in the legally correct manner, to successfully request the appropriate debt relief from Sars. 

Taxpayers who find themselves in this situation, anticipating only coal in their Christmas stockings, do have solutions available to them, but none so favourable as an application for a compromise of tax debt (“the compromise”), which Sars have, in recent times, become more amicable toward, showing great compassion for the financially constrained taxpayer.

Compromise of Tax Debt

To successfully compromise on the tax debt, the taxpayer needs to show current financial hardship, together with an estimation of their net worth. It must, however, be borne in mind that prior lavish spending could be a kink in the armour Sars needs to decline the initial proposal and request quite a drastic increase in the settlement amount, including the write-off of interest and penalties which have been attributed to the capital amount owed. 

The taxpayer then offers to settle (in part or in full) the capital amount owed to Sars, either by lumpsum or instalment payments. 

It is also important to note that a compromise can be applied to any form of tax debt and across all tax types, be it Personal or Corporate Income Tax, VAT and/or PAYE, and regardless of whether it is for an individual, trust or company. There is relief available to all taxpayers who qualify for the compromise of tax debt.

Payment Arrangements with Sars (Deferral of Payment)

Taxpayers that do not satisfy the requirements for a compromise but cannot afford to settle a tax debt in a lump sum payment, still have the option to apply and enter into a payment arrangement with Sars, which is known as a deferral of payment. This is where the taxpayer applies to Sars, subject to certain conditions, for a payment agreement in which the taxpayer can settle the outstanding amount over monthly instalment payments over time. 

This is an attractive option to many taxpayers, as it lessens the burden and reduces a large number that is expected to be settled immediately, to one that is manageable and paid in monthly instalments which are convenient to the taxpayer and Sars.  

With a payment arrangement, most notably, there is no write off of interest and penalties, and the entire amount is settled with monthly instalments. 

Risks of Non-Compliance: What’s at Stake?

Failure to respond to demands or to resolve a valid overdue liability can escalate a matter from ordinary debt collection to enforcement involving a bank, employer or another third party. More extensive legal action may follow where circumstances warrant it, including:

• Asset Seizure: Sars may attach and sell movable and immovable assets to recover debts.
• Sheriff Enforcement: Court-appointed sheriffs can execute warrants to seize goods and enforce payment.
• Credit Blacklisting: Defaulting taxpayers face blacklisting, crippling access to credit and business opportunities.
• Company Liquidation: Businesses with unresolved tax debts risk forced liquidation to satisfy Sars claims.
• Offshore Asset Repatriation: Sars now aggressively pursues international assets linked to illicit or unpaid taxes.

These enforcement mechanisms are daily realities for many South Africans, signifying a zero-tolerance policy for tax arrears.

Those who disagree with an assessment should use the appropriate dispute-resolution procedures and establish whether a suspension of payment is necessary and available in their circumstances.

For Sars, the challenge is to turn stronger compliance capabilities into sustainable cash recoveries while applying its powers lawfully and consistently.

Act Now or Face the Consequences this Christmas

Through carefully negotiated solutions, there is the possibility of a fresh start — a fair and balanced outcome that recognises the taxpayer's situation and provides the breathing room necessary to regain financial stability. Approaching Sars correctly and legally, can make all the difference, turning a seemingly insurmountable tax debt into a workable and mutually beneficial settlement for both parties. 

As a rule of thumb, any and all correspondence received from Sars should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against Sars implementing collection measures but also being specialists in their own right, the taxpayer will be correctly advised on the most appropriate solution to ensure their tax compliance.

It is recommended that a request for compromise / deferral be made in a proactive manner, even before a Letter of Final Demand is received, rather than waiting for Sars to come knocking at your door.

Written by Jashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA