Usually we do not include tax cases in this newsletter as they are rather technical and boring. We would however like to include these two as cautionary tales. The courts are no longer accepting previous practices – and what seems logical to a business owner is not how the courts will view an issue.

Fikile Ntayiya v South African Revenue Service (848/2023) [2025] ZASCA 183 (1 December 2025)

This is cautionary tale – yes, you can ask SARS to refund money they’ve taken from your bank account, but please, ensure you don’t prejudice your actual tax liability in the process!

The taxpayer, an attorney, had filed nil tax returns in his personal capacity. SARS conducted an audit and disagreed with this conclusion, in part assisted by a review of the taxpayer’s bank statements. The taxpayer’s key point to his objections? My practice is too small to generate such profits.

This paragraph is also key for tax practitioners:

[4] Towards the end of 2015, the appellant noted an appeal against the disallowance in terms of s 107 of the TAA. At that time, the appellant contended that he had submitted nil returns based on erroneous calculations by MNG. SARS also dismissed the appeal against the dismissal of the objection on the ground that the merits of his appeal fell short of the requirements of s 93(1)(d) or 93(1)(e) of the TAA. These provisions cater for two instances with a subtle difference. First, s 93(1)(d) applies where SARS is satisfied that there is a readily apparent undisputed error in its assessment or that of the taxpayer in a tax return. Second, s 93(1)(e) applies where a senior SARS official is satisfied that an assessment was based on a submission of an incorrect tax return by a third party under s 26 of the TAA’. Section 26 of the TAA deals with third party returns. (Own emphasis.)

The taxpayer had submitted an affidavit in 2012 stating that no income was earned. SARS then went on to impose 100% USP. The taxpayer went on to challenge the USP, and, shockingly, hired new tax practitioners at this point. SARS agreed to an ADR, on condition that certain conditions were met and information submitted. The new accountants submitted revised AFS to SARS, on which basis SARS also issued revised assessments. Spoiler – the taxpayer did not accept this…

[8] APAC, on behalf of the appellant and in response to SARS’ invitation, submitted the revised AFS to SARS. On 20 November 2019, SARS responded to the new information with revised calculations of some items in the assessment. However, the revised calculations did not result in a substantial decrease of the appellant’s tax liability. The appellant was dissatisfied and contended that the assessed amount was far more than his taxable income and therefore incorrect. The revised amount also included a 150% USP for intentional tax evasion, as well as an estimated amount for taxation on the use of motor vehicles, calculated in terms of the Seventh Schedule to the Income Tax Act 58 of 1962 (ITA). In addition to the USP and the tax levied on the use of motor vehicles, on 13 December 2019, SARS attached the appellant’s law firm’s business bank account as security for the tax debt. An amount of R1 200 000 in the account was frozen.

The taxpayer went back to court, lost, and then appealed with the request to add new evidence to the record. The new evidence was that a SARS debt manager had issued the attachment request to a FNB account, not a Standard Bank account. The Court found this to be irrelevant, as in either case, the bank accounts belonged to the law firm, not the taxpayer. As such, the taxpayer had no authority to enter into legal proceedings in the name of the law firm. This may seem like a trite point of law, as the attorney and the active person in charge of the law firm are the same person, but it is a critical distinction under law. In addition, when calculating the amounts the taxpayer was requesting relief for, he conflated monies taken from the law firm with personal payments. The calculation was thus fundamentally flawed.

The taxpayer then went on to abandon the objection on the 2014 returns, and only objected to the USP. The courts went on to find that they couldn’t overturn SARS’s calculation as the taxpayer had conceded those, but found the USP reasonable on the basis of the behaviour demonstrated.

A further point of interest, the taxpayer had bought certain vehicles in his personal capacity and used them for both business and private purposes. The taxpayer had objected to the use of the Seventh Schedule to calculate a right of use of a motor vehicle for the taxpayer as the taxpayer cannot be an employee of himself. SARS contended that without logbooks or other sources, it relied on the Seventh Schedule as a clearly defined, objective test of how to calculate the value of the business use. The court agreed…