The report in today's print media stating that "The South African Revenue Service took an unexpected step back from its controversial "pay now argue later" policy yesterday, agreeing to the reassessment of a R249m VAT claim against Retail Apparel" is factually incorrect. It is a factual misstatement to suggest that SARS applies the "pay now argue later" rule in companies placed under provisional liquidation.
Where SARS is a creditor in a company under liquidation, like all other creditors, SARS has to establish its claim in terms of the Insolvency Act. Like all other creditors, SARS has to follow the procedure set out in the Insolvency Act to prove its claim and satisfy all other creditors, the liquidator and the Master of the High Court of the validity of the claim. SARS can only receive payment in respect of a company under liquidation after satisfying the creditors, the liquidator, and the Master of the High Court. Reports in the media incorrectly portrays SARS as having aggressively sought to collect using the "pay now argue later" rule without following due process.
It is also factually incorrect to suggest that SARS has "agreed to the re-assessment of a R249m VAT claim against Retail Apparel". In a joint statement between SARS and the Liquidators of Retail Apparel (Pty) Ltd, the two parties stated that they have agreed on a process to determine the amount of VAT due to or by the Company in liquidation. This does not amount to a reassessment.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE