South Africans are increasingly waking up to frozen bank accounts and sudden SARS deductions, often before they fully understand what has happened or what rights they still have.
However, Nico Theron, founder of Unicus Tax Specialists SA warns that many individuals, employers, small businesses and larger companies do not realise SARS collection action can sometimes be challenged and, in certain circumstances, even reversed.
“The mistake taxpayers make is assuming that because SARS has taken the money, they must have been entitled to do so,” says Theron.
Powerful, but not unlimited
SARS has significant powers to collect outstanding tax debts, which can have a dire effect on salaries, business bank accounts, or funds held by a third party for the taxpayer.
For many taxpayers, the most invasive form of collection is when money is removed from a bank account. By the time the taxpayer becomes aware of the issue, the cashflow damage may already be immediate and severe.
In practical terms, this can include situations where:
• a bank account is debited or frozen through SARS collection action
• an employer is instructed to deduct money from a salary
• external debt collectors demand payment on SARS’ behalf
• collection continues even where the statutory requirements have not been properly met
“SARS is not above the law just because it is collecting tax,” says Nico Theron. “Its collection powers still have limits, and SARS has to act within those limits.”
Stopping collection is only half the issue
Theron adds that the public often misunderstands what happens after SARS has already collected money.
“Taxpayers often assume the money is gone and that their only option is a slow complaint or escalation process. While that is sometimes true, it isn’t always the case. If SARS’ collection action is unlawful, the right intervention can stop further action and may even result in SARS paying back money that has already been taken.”
This distinction is important because collection disputes are often not solved through the ordinary objection process. A taxpayer may be able to object to an assessment, but the collection step itself may require a separate and urgent strategy.
“If the problem is unlawful collection action, the taxpayer must respond to that problem directly,” says Theron. “The wrong procedure can waste days that the taxpayer simply does not have.”
Speed is importnat when cashflow is on the line
While SARS escalation channels and complaints may have their place, they are often too slow where salaries, payroll, suppliers, debit orders or business operations are already under pressure.
In the right case, a properly framed legal intervention can produce a much faster result. With the help of competent tax professionals, unlawful SARS collection action can be stopped and millions of rand can potentially be released or recovered.
“If SARS has acted outside the law, the aim is simple: stop the collection, reverse the damage and recover the money. We’ve seen matters change within days once the legal issue is identified and raised properly,” Theron notes.
