How SARS will take 8 years in a tax dispute and then empty your accounts

In order to fully “appreciate” this epic disaster, one has to go back to 2006 when I worked for Software Futures as an architect for Vodacom. Software Futures was back then a typical body-shop and most freelancers worked through them as Software Futures managed placement and payroll for freelancers.

Software Futures was part of the Fidentia group and any South African will remember the multi-billion Rand fraud conducted, where the owner, J Arthur Brown, managed to avoid a jail-term, despite having to face 180 charges amounting to over R1,5 billion in fraudulent transactions.

One thing Software Futures and Fidentia also did very well is commit tax-fraud. People like me would receive salary slips which reflect the deduction of tax, but Software Futures for example would actually never pay the tax over to the revenue service. As a tax-payer I was only aware of this issue when SARS caused delays with my 2007 tax-submission and at that point in time missed an IRP5 from Software Futures.

Despite submitting the missing IRP5 and additional supplementary information we had to submit our first objection in September 2007 as SARS assessed that I had not paid any tax. Yes, you read right – no tax was paid to SARS from Fidentia.  Since then we have not been able to arrive at a juncture, where SARS would see that the money paid into my bank account is the nets-take-home salary as depicted on the payslip. SARS decided that since PAYE (Pay As You Earn) was not paid over by the employer, the onus should now be put on me, the tax-payer, to come up with the shortfall. It makes perfectly sense in SARS eyes, as they could hardly collect money from the now bankrupt Fidentia or it’s owners.

All sounds like a simple matter: Submit objection, attach payslips, employment contract, bank statements and it would not require a chartered accountant to figure out the money arriving in my bank account was the same as the net-salary declared on the payslip and therefore tax would have to be paid by the employer. This was all done in 2007 already. Then again in 2008, 2009, 2010, 2011, 2012, 2013 and 2014. One would think that SARS would eventually understand, after all it is really not that complicated.

But logic does not prevail with SARS officials and over the last 7 years we have visited the tax office dozens of times per year, resubmitted the same information over and over again and yet, SARS decided today is the day of “pay now, argue later” and pretty much wiped out my bank accounts. Money I needed to pay for insurance, my kid’s schooling, food and getting to work in the morning. The tax-man was however kind enough to leave me with R 50.14 – I will make good use of it and will equally split it amongst all my debtors and hope to god, that my insurance and medical aid will be kinder, just in case I need to call on them without having paid anything this month.

When speaking to the SARS officer today, she declined having any knowledge of the case, but yet she has been dealing with my accountant during the course of the year. Apparently we have not submitted all information and when asked, no-one can really tell us what is missing.

One would think that during an objection and considering that my accountant has been in contact with SARS just a few days prior to SARS instructing my bank to release funds, that SARS would suspend any collection until the matter is resolved, but this is not so.

One would also think that SARS would take into consideration, a tax payer’s compliance history; the amount of tax involved; the risk of dissipation of assets; the ability of the taxpayer to provide adequate security and obviously any consequences resulting in the aftermath of the collection. None of this mattered to Debbie Moodley of SARS Megawatt Park, or the dozen of people at SARS who dealt with this issue over the last 8 years.

Update 28 Nov 2014: After a round of escalations SARS has finally admitted that they had been wrong all along and have now agreed not only to refund all the salary taken, but also conceded that they will refund money owed over the last 7 years. A dreadful long journey, considering that this matter could have been resolved 7 years ago, if SARS officials did their job.

Update 1 Dec 2014: In other good news, the luck of fraudster and scumbag, J Arthur Brown, has finally run out and he has now been convicted to a 15 year jail-term. It is still fascinating to see that no-one was able to recover the misappropriated funds.

Update 19 Dec 2014: It has been now almost 3 weeks and SARS still has not refunded the initial money taken from my transactional account and all people contacted have decided not to respond.

Update 24 Dec 2014: SARS has allocated the initial funds taken from me for payment middle of January 2015 – a full 8 weeks later. The credit of the funds does not include interest lost and this will be another payment (no ETA on that).