Company and director sentenced for PAYE fraud

An investigation by SARS auditors found that a false Pay As You Earn (“PAYE”) credit was submitted to nullify a tax debt to the value of ZAR 5.6 million. The PAYE credit was disallowed by the SARS auditors.

The company and the director involved pleaded guilty in the Bloemfontein Regional Court. The company was fined ZAR 100,000 suspended in full for 5 years, while the director was fined ZAR 500,000 or 5 years imprisonment suspended in full for 5 years.

SARS’ Commissioner noted in this regard that companies and their directors would face criminal prosecution if they transgressed the law and tried to defraud the fiscus of any revenue that was due to the state. The Commissioner specifically noted that “SARS will make it hard and costly for any taxpayer who wilfully and intentionally seeks to break the law as we expect every taxpayer to meet their obligations and pay their fair share of tax”.

This media release, along with a number of previous alerts, indicate that SARS are actively investigating taxpayers engaged in fraudulent activity and are taking the necessary steps to ensure that guilty parties are brought to book.    

In the context of PAYE it should also be noted that a previous alert by SARS, published on 6 July 2021, highlighted that as from July 2021 it will start to impose administrative penalties in respect of PAYE where an employer has failed to submit the annual Employer Reconciliation Declaration Form (“EMP501”) on time. The alert published by Mazars in this regard can be accessed here.

30/07/2021