JHB 
The South African Revenue Service (SARS) continues to strengthen its enforcement measures, with a growing focus on holding directors personally liable for company tax debts. Recent legal developments have reaffirmed SARS’s authority to pursue personal liability against the directors of companies found to have been negligent or dishonest in their tax compliance obligations. For business leaders, understanding these risks and acting proactively is essential.
When can directors be held personally liable?
Under the Tax Administration Act, directors and company representatives can face personal liability if:
- The company has failed to meet its tax obligations.
- Non-compliance results from negligence, fraud, or intentional misrepresentation.
- Tax debts are incurred without the company having the financial capacity to meet them.
The courts have upheld SARS’s right to recover tax debts from directors in cases where they failed to fulfil their fiduciary duties, particularly when evidence of reckless conduct or intentional non-compliance is present.
Consequences of personal liability
The implications for directors are significant:
- Personal assets may be targeted to recover company tax debts.
- Directors can be held jointly and severally liable with the company.
- Reputational damage and disqualification from acting as a company director in the future.
These risks underscore the importance of directors exercising diligence in oversight of their company’s tax affairs and ensuring compliance at all times.
Key responsibilities for directors
To mitigate the risk of personal liability, directors should:
- Ensure tax returns and payments are submitted on time.
- Maintain accurate financial records and documentation.
- Engage with SARS proactively in the event of disputes or potential compliance issues.
- Seek professional advice when facing complex tax matters.
How MMS Group can assist
At MMS Group, we understand the challenges that directors face in meeting their tax compliance obligations. Our team of tax and accounting specialists provides comprehensive support to help companies and directors maintain full compliance with SARS requirements.
We offer:
- Professional tax compliance and advisory services.
- Assistance with SARS engagements and dispute resolution.
- Guidance on fiduciary responsibilities and corporate governance.
- Ongoing support to mitigate the risk of personal liability.
Directors cannot afford to overlook their responsibilities when it comes to company tax compliance. If you are uncertain about your company’s standing or need professional guidance, contact MMS Group for expert support tailored to your business needs.