Sasfin Holdings, a financial services firm, announced on Tuesday that its banking division had been served with a civil summons from the South African Revenue Service (SARS), demanding a total of R4.87 billion plus interest and costs.
The summons, presented as a damages claim, alleges Sasfin’s failure to recover income tax, VAT, and penalties from former clients of its banking arm, a claim vehemently refuted by the company.
“This summons relates to Sars’ purported inability to collect income tax, value-added tax and penalties allegedly owed by former foreign exchange clients of the bank,” Sasfin said in an announcement on the JSE news service SENS.
Sasfin stated that it had received legal counsel confirming its belief that the claim falls “outside the recognized parameters of applicable law and has a very remote likelihood of success.”
The claim stems from transactions dating back to 2014, during which former Sasfin Bank employees colluded with clients at that time, as per the company’s statement. Criminal cases were initiated against the involved parties.
“We are confident the Sars claim has no merit. We have filed a notice of intention to defend the matter, which we will do rigorously. It is unjust for banks to be held liable to Sars for taxes their clients have failed to pay,” said Sasfin CEO Michael Sassoon.
“Of importance is that this is not a tax claim, but a claim for damages and has nothing to do with Sasfin’s own tax affairs. The claim, which we emphatically reject, will involve a protracted trial action, and the matter is only likely to conclude in several years’ time,” Sassoon said.
SARS Respond
The Commissioner for South African Revenue Service (SARS) Edward Kieswetter hereby confirms that SARS has instituted legal proceedings against Sasfin Bank, as disclosed in the SENS announcement issued by Sasfin Holdings Ltd on 27 February 2024.
SARS conducted a thorough investigation into various South African taxpayers who had not made true and accurate tax disclosures to SARS.
“The investigation revealed that the taxpayers had colluded to expatriate funds offshore in a manner that obscured tracing the expatriated payments and jeopardises the recovery of tax in South Africa,” said in a statement.
The Commissioner’s position is that it is inappropriate to comment on the question of liability and compensation for the fiscus’ loss, as these are legal issues that are now before the South African judicial system. Given this development, SARS will not be making any further comment.
The Commissioner wishes to affirm his commitment to pursue the enforcement and recovery of taxes without fear, favour or prejudice in the interest of upholding the fiscal integrity of the South African tax system.
