Backfiring Of Tax Advice Gambit: R216 Million Payback Looms for Billionaire and Tax Advisor

Billionaire Dr Wiese and three other defendants have suffered another litigation loss after the Supreme Court of Appeal (“SCA”) has released a judgment siding with SARS and the High Court. Further litigation will determine if the defendants knowingly obstructed tax collection and must pay the substantial sum of R216 million to SARS.

The Tax Debt

Pertinently, SARS approached the High Court for an order declaring four defendants (“the defendants”), including billionaire Dr Wiese and a former Edward Nathan Sonnenberg (“ENS”) executive, jointly and severally liable to pay SARS R216 million in accordance with section 183 of the Tax Administration Act, No. 28 of 2011 (“the TAA”). Section 183 of the TAA reads as follows:

“183.?Liability of person assisting in dissipation of assets. — If a person knowingly assists in dissipating a taxpayer’s assets in order to obstruct the collection of a tax debt of the taxpayer, the person is jointly and severally liable with the taxpayer for the tax debt to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s tax debt.”

The court order was sought by SARS on the basis that the defendants knowingly assisted a taxpayer, Energy Africa (Pty) Ltd (“the taxpayer”) in dissipating its sole asset (a loan claim) on 19 April 2013 to its holding company. The dissipation of the sole asset on 19 April 2013 occurred after the taxpayer and its tax advisors were informed by SARS on 16 November 2012 that it would be issuing assessments for the 2007 tax period, to recover taxes that were not paid (“the tax debt”). On 21 August 2013, SARS issued the promised additional assessments to include the tax debt; which consists of capital gains tax totalling R453?126?518 (“CGT debt”) and secondary tax on companies totalling R487?205?316 (“the STC debt”) plus interest and penalties.

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