Sars is intensifying its efforts to collect outstanding tax debt, with bank appointments, third-party recovery mechanisms and targeted enforcement forming part of a broader strategy to improve compliance and protect the public purse.

Although Sars has continued to strengthen its revenue collection and enforcement capabilities, including the use of data driven insights, the growing value of outstanding taxpayer debt highlights the challenge of converting assessed tax liabilities into actual cash for the fiscus.

According to the Sars Annual Report for the 2025/26 financial year, total tax revenue reached approximately R2.47-trillion, compared with R2.30-trillion in the previous financial year. The report also highlights progress in compliance-related collections, improved risk detection and targeted measures to recover overdue debt.

However, the figures reveal a significant concern: Sars reported receivables of R705-billion, comprising R658.4-billion in overdue debt and R46.6-billion in taxes assessed but not yet due for payment.

The scale of these receivables places debt recovery firmly in the spotlight, particularly as Sars seeks to ensure that taxpayers who meet their obligations are not disadvantaged by those who fail to pay.

The Expanding Use of Third-Party Financial Data

Under the leadership of Commissioner Kieswetter, Sars has been steadily rebuilding its institutional capacity and investing heavily in digital modernisation. 

In practical terms, this means Sars is increasingly integrating vast streams of third-party financial data into its compliance ecosystem. Financial institutions, employers, medical schemes, investment platforms and other reporting entities provide structured data to Sars, enabling the revenue authority to compare taxpayer declarations against independently sourced financial information.

Through the use of integrated data analytics tools, Sars can flag inconsistencies between declared income and actual financial activity, identify undeclared revenue streams and highlight taxpayers carrying outstanding liabilities.

Risk profiling models can identify taxpayers who may have understated income or claimed inappropriate deductions and once flagged, these cases can move quickly from automated engagement to enforcement through robust historical audits, or directly to Civil Judgement against the offending taxpayer where more amicable collection attempts have been ignored.

Growing Receivables Put Pressure on Debt Recovery

Sars reported that gross receivables before impairment increased by 28.6% during the year, compared with 19.4% in the previous financial year. The increase was attributed primarily to growth in significant debtors.

The report identifies 1 690 significant taxpayers, each with a consolidated account balance of R50-million or more. Together, these taxpayers account for approximately R381-billion, representing 54% of the relevant receivables balance.

Many of these cases are complex and long-running. Some involve disputed tax liabilities, possible criminal sanctions, non-responsive taxpayers or the absence of payment arrangements with Sars. These circumstances can make recovery difficult, even where substantial amounts remain recorded as owing.

Sars recognised an impairment allowance of approximately R345.3-billion against gross receivables of R726-billion, reflecting its assessment of the amounts expected to be recovered. This is an important distinction: the amount recorded as owing to Sars is not necessarily the amount the revenue service expects to collect.

The ageing of outstanding debt adds to the challenge. The report states that R329-billion, or 50% of gross overdue non-Provisional Tax receivables, was 25 months or older. A further R148-billion in Provisional Tax receivables was at least 15 years old.

These figures underscore why Sars is pursuing a differentiated approach to debt collection, combining assistance for taxpayers willing to comply with firmer enforcement against those who fail to meet their obligations.

When Voluntary Payment Fails, Sars Will Turn to Enforcement

Sars' approach recognises that many taxpayers want to comply but may need assistance to regularise their affairs. The revenue service therefore uses a range of interventions, from reminders and payment arrangements to more direct recovery action.

Where a valid tax debt remains unpaid, however, Sars may use statutory collection mechanisms to recover money owed. One important mechanism is the appointment of a third party to pay Sars an amount from money that the third party holds for, or owes to, the taxpayer, subject to the applicable legal requirements.

In practical terms, this can involve a bank holding funds in a taxpayer's account or an employer responsible for paying the taxpayer's salary. Depending on the circumstances and the applicable legal process, a third party may be required to redirect an amount to Sars rather than pay it to the taxpayer.

This type of intervention is particularly relevant where ordinary requests for payment have not resulted in settlement. It can allow Sars to pursue a tax debt through an identifiable source of funds instead of relying solely on the taxpayer to make a voluntary payment.

The annual report confirms that Sars continued to use third-party appointments as part of its collection strategy. Its automated bank third-party appointment process collected R572-million during the 2025/26 financial year.

Debt Collection from Key Decision Makers

Another key recovery measure which we have seen Sars using more frequently for company tax debts, is that of Personal Liability. 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.

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. 

For taxpayers, the practical message is that ignoring outstanding tax obligations can expose them to more direct recovery action. For businesses, the risk extends beyond the tax account itself to amounts payable by banks, employers or other parties where the relevant legal requirements have been met, or even Personal Liability for key decision makers.

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