Preservation order in terms of sec 163 of the TAA
17 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: I assisted
a client with its vat returns from 2009 to date. SARS has now selected certain
periods for verification and we gave them everything including the contract
that the vendor concluded with x to build Low costs houses. The refund was
later finalised and paid into the vendor’s bank account. When the vendor utilised
some money to pay my fees. Two days later, Bank y froze both my and the
vendor’s account. I need your advise please.
A: To "freeze” the bank account SARS would have to get a
preservation order in terms of section 163 of the Tax Administration Act.
The provisional order obtained by SARS requires confirmation by the
court, whereby the taxpayer can make a case that it not be made final or have
it set aside (section 163(4)).
A notice should have been sent
to the taxpayer in this regard (section 165 of the Tax Administration Act).
From a practical approach, the
taxpayer and you will have to contact the bank and SARS Call Centre to confirm
that a preservation order applies. If the bank cannot produce the
preservation order obtained by SARS they should be instructed to "unfreeze” the
account or be added as party to any legal application.
We can only come to the
conclusion that SARS would follow this approach if the employee and company are
connected persons. We would advise that you confirm whether a
preservation order applies and whether the employee and employer are connected
Section 180 provides that a
person is personally liable for any outstanding tax debt of the taxpayer to the
extent that the person's negligence or fraud resulted in the failure to pay the
tax debt if -
(a) the person controls or is
regularly involved in the management of the overall financial affairs of a
(b) a senior SARS official is
satisfied that the person is or was negligent or fraudulent in respect of the
payment of the tax debts of the taxpayer.
Disclaimer: Nothing in
this query and answer should be construed as constituting tax advice or a tax
opinion. An expert should be consulted for advice based on the facts and
circumstances of each transaction/case. Even though great care has been taken
to ensure the accuracy of the answer, SAIT do not accept any responsibility for
consequences of decisions taken based on this query and answer. It remains your
own responsibility to consult the relevant primary resources when taking a