You are Here > Home > Taxes > When SARS unlawfully help themselves to your bank balance

When SARS unlawfully help themselves to your bank balance

Jul 15, 2020

By Jashwin Baijoo, Tax Attorney at Tax Consulting South Africa 

When SARS unlawfully help themselves to your bank balanceEverybody knows SARS is under collection pressure and they have grown rather fond of appointing third parties, such as banks, to recover outstanding tax debts directly, which leaves taxpayers stunned.

This is a quick and effective debt recovery measure, but the question is: are these strategies legal?

These strategies may result in taxpayers suffering severe financial hardship, but worse still, it appears taxpayers have very limited options to find redress where a SARS official reaches into their bank account by means of an unlawfully executed process.

As an admitted attorney, a fair portion of my early career was spent in debt collection and litigation, and you learn first-hand that unlawful appointments and acts with no integrity, which have far-reaching implications for the debtors, can only be dealt with in a decisive manner.

What are your options?

But what should you concretely do when your bank balance has suddenly disappeared? You can try and resolve this by making contact with SARS’ Debt Department or airing your grievances to the contact centre, but you may find that SARS is less effective in returning your money than the kind of effectiveness they display when accessing your bank account!

Harsh as it may be, where you urgently want the transaction reversed, your surest recourse is a High Court application. Case in point is the recent judgement of SIP Project Managers (Pty) Ltd v The Commissioner for the South African Revenue Service (Case Number 11521/2020) which has reaffirmed faith in the judicial system when it comes to debt-collection rules, by showing no fear or favour in upholding taxpayers’ rights.

The case concerned facts where SARS took R1.2 million from the company’s bank account without following due process.

The High Court declared SARS’ third-party appointment of the bank null and void. It then proceeded to sanction the premature issuing of a Final Demand by SARS, declaring such issuing as unlawful and ordering SARS to repay the funds that were unlawfully obtained.

Know your rights

This case again illustrates that you need to know your rights as taxpayer. The law is there for a reason, and when it comes to debt litigation, the courts of South Africa act both swiftly and decisively to ensure the protection of taxpayers against unfettered abuse of power.

For a SARS Letter of Final Demand to be valid, there must be delivery of the letter to the taxpayer. The letter must contain both the recovery steps which SARS is permitted to take, as well as the relief measures available to the taxpayer. Should any of these requirements be lacking, the Final Demand will be considered invalid.

Any subsequent collection steps implemented by SARS, by virtue of non-compliance with the Final Demand requirements, may be deemed unlawful, including the taking of the taxpayer’s funds directly from the bank via a third-party appointment.

We have seen a significant increase in SARS using banks to collect alleged tax debts. In order to protect yourself from SARS, the best strategy remains to always ensure that you comply with your tax-paying obligations.

Where you find yourself on the wrong side of SARS, there is a first mover advantage in requesting a suspension of payment, protecting your bank balance whilst the matter is resolved.

However, where things do go wrong, SARS must be engaged legally.

This post was based on a press release issued on behalf of Tax Consulting South Africa.


  1. Please note this link mentioned in your article does not work!
    SIP Project Managers (Pty) Ltd v The Commissioner for the South African Revenue Service

    • SARS must have moved the document with the changes to the SARS website – you could probably find it on a google search


Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

Five ways to boost your income and financial knowledge

Angelique Ruzicka shares five ideas for how you can improve your financial knowledge and possibly boost your income. Boosting your income, especially during a pandemic, can feel nigh on impossible, especially when costs are going up and you’ve been told there’s no...

Financial tools to keep you on track in 2022

Advances in technology mean that it’s now so easy to keep track of your finances and achieve savings goals, using smartphone apps, websites, and other online financial tools, says Angelique Ruzicka. If you’re still using Excel or some other rudimentary means to keep...

What will the rand do in 2022?

Ryan Booysen, MD at DG Capital Forex, stares into his crystal ball to predict where the rand will go in 2022. The rand ended 2021 on the back foot, after the Omicron announcement and subsequent global kneejerk reaction of isolation and red-listing the country. And...

SARS gets serious over non-compliance

Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting SA, warns all non-compliant taxpayers that SARS could be coming for them sooner rather than later. In media statements in recent months, the South African Revenue Service (SARS) has made clear...

Should I use my retirement lump sum to settle my debt?

A question that I often receive is whether it's a good idea to use one's lump sum on retirement to pay off short-term debts, such as car debt or one's credit card. For example, Ntombise recently wrote to me: “I have just retired from work and expect a lump sum...

Reflecting on the year that was

Victoria Reuvers, Managing Director at Morningstar Investment Management South Africa, looks at how financial markets performed in 2021. As a runner, the change in seasons gives me time to reflect. Autumn is my favourite season, and always reminds me that change is...

Immediate access to retirement funds unlikely

Retirement reform paper calls for comment but no move on immediate access. Retirement fund members hoping to access their retirement funds for urgent financial relief will be disappointed by the retirement reform paper issued by National Treasury last month. In the...

The 2022 survival budget

As if the last two years were not tough enough, there is no silver lining awaiting us in 2022. In 2021 we absorbed further fuel-price increases, a 15% hike in electricity costs, and an interest-rate increase of 25 basis points – and this is only the start. It is...

Using critical illness insurance to supplement medical cover

Many financial advisers are using life products to supplement medical costs. While current legislation does not allow for cover like critical illness insurance to be marketed as a product to cover medical costs, for most policyholders, that is exactly what it is used...

Savvy ways to use your bonus

Many companies are cash strapped due to the impact of Covid-19, but if you are one of the lucky few who got a bonus or windfall this year, it will be tempting to spend it to celebrate surviving another tough year. However, money experts recommend being a bit cautious,...

Pin It on Pinterest

Share This