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HSBC balks at SARS bid for King’s tax

27 January 2013   (0 Comments)
Posted by: SAIT Technical
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By Amanda Visser (Business Day)

Executive summary

HSBC Trustee, a subsidiary of HSBC UK, has brought an urgent interdict against SARS challenging the constitutionality of sections in the TAA which give it the power to hold third parties liable for tax debt. HSBC Trustee received a notice from SARS stating that SARS intended to exercise its powers to determine whether and to what extent HSBC Trustee was liable for the unpaid tax debt of Ben Nevis, a company associated with Dave King, which owes SARS R2.7bn in tax debt. The application was heard in the North Gauteng High Court. The application is being opposed by SARS and the Minister of Finance.Law firm Bell Dewar, for HSBC Trustee, is challenging the act’s constitutionality.

Full article

HSBC Trustee, a subsidiary of UK-based HSBC bank, has brought an urgent interdict against the South African Revenue Service (SARS), challenging the constitutionality of sections of the Tax Administration Act which give it the power to hold third parties liable for tax debt.

In November, SARS sent HSBC Trustee notice that it intended to "exercise its statutory powers” to determine whether, and to what extent, HSBC Trustee was liable for the unpaid tax debt of Ben Nevis — a company associated with businessman Dave King, which has a tax debt of R2.7bn.

The application was heard in the North Gauteng High Court on Wednesday — two days before the expiry of a deadline SARS had set for HSBC Trustee to make presentations on its liability.

The SARS commissioner and the finance minister are opposing the application.

SARS said in its heads of argument it had been trying to recover unpaid taxes from Mr King and Ben Nevis for 12 years.

It said the tax court had finally determined the unpaid tax debt of Ben Nevis. "In doing so, it has penetrated the corporate veil ostensibly separating Ben Nevis and associated entities from Mr King. Attempts to appeal these findings have failed. They are final,” SARS said in its affidavit.

SARS said the beneficial owner of Ben Nevis was the Glencoe Trust and before that it was the Caledonia Trust. "During all material periods since 1993, either HSBC Trustee or its predecessor has been the trustee of the Glencoe Trust and Caledonia Trust,” SARS argued.

It said the Tax Administration Act addressed the issue of liability due to assisting in the "dissipation” of assets.

If a person knowingly helps to dissipate a taxpayer’s assets to obstruct the collection of a tax debt, the person is jointly and severally liable for it "to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s tax debt”, SARS argued.

Law firm Bell Dewar, for HSBC Trustee, was unable on Wednesday to provide a copy of its heads of argument, but according to other court papers, is challenging the act’s constitutionality.

Judgment was reserved.



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