Barbara Curson
4 minute read
18 May 2020
8:09 am

Sars ordered to pay R1.3m to taxpayer in debt recovery case

Barbara Curson

A win for a taxpayer as third party notice issued to bank for withdrawal of funds is declared unlawful.

Picture: Moneyweb

SIP Project Managers (the taxpayer) vs The Commissioner for Sars (South African Revenue Service) relates to Sars’ appointment of Standard Bank as a third party agent to withdraw funds from the taxpayer’s bank account to settle a tax debt.

Except the taxpayer had received no letters of demand from Sars and, even worse, there was no tax debt.


On June 30, 2019, the taxpayer was issued with an assessment that reflected a tax refund of R1.6 million. However, the taxpayer was not aware that Sars later issued an additional assessment requiring R1.2 million to be paid by November 30, 2019.

The taxpayer first became aware of this additional assessment on February 6, 2020, when Standard Bank received notification from Sars to pay R1.3 million from the taxpayer’s bank account. On that day, the taxpayer lodged an objection and requested a suspension of payment until the objection had been finalised. However, the amount had already been taken from the taxpayer’s bank account.

In terms of the Tax Administration Act (TAA), a final letter of demand must be delivered to the taxpayer at least 10 days before the issue of a third party notice.

However, according to the taxpayer, Sars had not issued any letter of demand. Not on eFiling, nor by email, post or physical delivery. The taxpayer took a screenshot of their eFiling profile showing no letter of demand, which was rendered as proof to the court.

On calling the Sars employee whose name appeared on the third party appointment letter to Standard Bank, the taxpayer was informed that Sars had sent three letters of demand. However, none of these letters of demand had been received by the taxpayer, nor had they been uploaded onto the taxpayer’s eFiling profile. The taxpayer contacted the Sars call centre, which confirmed that the letters of demand had not been loaded onto the eFiling profile.


In the judgment handed down by the High Court on April 30, 2020, the court found that:

  • The Sars official’s account of how the final demand letters were sent varies in the affidavit she deposed. In one paragraph, she claimed she “sent” the letters of demand, in another she said these are system-generated.
  • Sars could not produce an affidavit deposed by any official who had personal knowledge that the letters of demand were on the taxpayer’s eFiling profile. All that Sars could show was that the letters of demand were created on the dates reflected, but not correctly submitted to the registered user and “delivered”, per the Rules for Electronic Communications issued in terms of the TAA.
  • Sars had not delivered a letter of demand to the taxpayer. The stated letter (which Sars in any event cannot show was delivered to the taxpayer) was issued before the final due date of payment.
  • Further, there was no outstanding debt on the day that Sars issued the so-called final demand.
  • On the affidavit submitted to the court by Sars, the court found that the paragraphs regarding who actually sent the letters were all contradictory.
  • The court noted that it should have been relatively simple for Sars to furnish proof that the letter of demand appeared on the eFiling system. But Sars didn’t.
  • The third party notice issued to Standard Bank was unlawful and declared null and void.
  • Sars was ordered to repay the amount of R1.3 million to the taxpayer, together with interest, as well as the taxpayer’s costs of the application.

This matter raises worrying issues

It is imperative that Sars’s system-generated mail appears on a taxpayer’s eFiling profile, plus the taxpayer should be alerted.

The taxpayer should be alerted that Sars has raised further queries, and that an additional assessment has been raised.

The judgment only concerned the validity of the letter of demand, and the lawfulness of the third party notice. However, it appears that the period between Sars requesting further information and raising the additional assessment was extremely short.

The senior Sars official who signs the third party appointment letters should take responsibility for ensuring that letters of demand are received and signed for by the taxpayer. I have added “signed for”.

It is too easy for Sars officials to insist that letters of demand were sent. And there is no recourse.

Perhaps it is time for senior Sars officials to be taken on review when they have abused their authority.

Not every taxpayer can afford to litigate

If Sars continues to abuse its very wide powers for the recovery of tax debts then surely these should be narrowed? Not every taxpayer can afford to litigate.

Further, should the TAA be amended to allow for penalties to be imposed on Sars every time it contravenes the Act?

Perhaps Sars will then adhere to it.

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