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Serving Hard Time for “Serious Tax Offences” – Taxpayers Beware SARS’ Bolstered Prosecution Powers


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Serving Hard Time for “Serious Tax Offences” – Taxpayers Beware SARS’ Bolstered Prosecution Powers

Tax Consulting SA

3rd May 2024


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The Johannesburg High Court handed down an unfathomable sentence of a cumulative 205 years behind bars to a “VAT Fraud Syndicate” in April 2024! Broken down, individual sentences ranged from 5 years to 65 years, for fraudulent VAT claims from SARS, estimated at over R200 million.

As mind-boggling as the number, and sentence are, criminal convictions from SARS have been plentiful over the last few years, stemming from lifestyle audits, fraudulent return submissions, and anything else deemed a “serious tax offence”. As the average South African, you may ask yourself what qualifies as “serious”, and what other sanctions could such a conviction entail.


In short, the Tax Administration Act, 28 of 2011, defines a “serious tax offence” as below:


Excerpt from section 1 of the TAA, being the “Definitions” section

Criminality of Non-Compliance

In practice, a “tax offence” can take the form of any contravention of a tax act, and including the criminal offences specifically listed and in relation to taxpayer non-compliance! 

This may come across as quite broad, and perhaps that is the intention as taxpayers may face fines or even imprisonment for a wide range of contraventions, including, but not limited to:

-        Submission or issuance of false documentation / certification;

-        Obstruction of a SARS Official in carrying out their duties;

-        Failing to notify SARS of a change in registered details; and

-        Failing to submit a tax return or retain sufficient records.

These strong statements on eradicating non-compliance by SARS may be perceived by the man on the street as a recent development, but criminal prosecution is something which has long been on the cards for the revenue collector and is simply now more public than before! 

For context, the NPA took its seat at SARS’ round table back in 2003, by virtue of a Memorandum of Understanding. The MOU was further updated in 2019, after which the barrage of criminal cases involving tax evasive maneuvers fell into the realm of “public interest”.

One key point of the MOU is the undertaking by the NPA to establish a Specialist Tax Component, who’s role would be the prosecution of serious and complex, high-level tax offences, which we have seen the SARS/NPA team making good on, over the past few years.

NPA Adds Weight to SARS’ Crusade on Non-Compliance 

Over the course of the years since the “prosecution coalition” commenced, the tempo picked up, with successful prosecutions against both individuals and companies, ranging from account draining fines, to life-altering prison sentences.

We have seen first-hand how both the fines and sentences imposed have escalated over time, with the NPA becoming almost surgical in its prosecutions, and fully utilizing the lower burden of proof to seal convictions on tax related offences.

Now is not the time to take risks. SARS’ approach clearly shows we are dealing with a competent revenue authority, so why risk it when compliance is evidently the preferred way forward, which SARS is willing and ready to assist all taxpayers with, as advised by Commissioner Edward Kieswetter, stating that SARS will do its best to “make it ease and seamless for taxpayers when they transact with the organization”.

This statement, when SARS is correctly legally engaged, is evidently made by a revenue authority that is steadily aligning itself with international standards and climbing back to its former prestige as one of the world’s finest.

The Best Strategy to Remedying Non-Compliance

Our insight in the market has noted SARS upping its collection power, with sometimes aggressive collection steps including salary garnishes, Sheriff callouts and even taking money directly from business and/or personal accounts.

In order to protect yourself from financial ruin, and even possible jail-time, it remains the best strategy that you always ensure compliance. 

Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your unblemished record, from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.

As a rule of thumb, any and all correspondence received from SARS should be legally addressed, as often legal professional privilege is a must in instances of non-compliance. This will not only serve in safeguarding against SARS implementing collection measures or potentially criminal charges, but also being specialists in their own right, taxpayers and practitioners will be correctly advised on the most appropriate solution to ensure full tax compliance.

Written by Tax Consulting SA



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