A debt is legally enforceable when it is made an order of court.
Chapter 11 of the Tax Administration Act 28 of 2011 regulates the recovery of tax by SARS. Part B thereof relates to the civil judgment procedure.
Section 172 of the Tax Administration Act 28 of 2011 (“TAA”) allows SARS to obtain civil judgments when recovering outstanding taxes (“tax judgments”).
The taxpayer is given at least 10 business days’ notice from SARS that it will proceed with obtaining civil judgement, unless it is satisfied that giving notice would prejudice the collection of the tax (sections 172 (3)).
Civil judgments need not be brought in the high court but can be obtained in the local magistrates’ court, provided that specific magistrates’ court has jurisdiction over the taxpayer (section 173). SARS will file a certified statement with the court setting out the amount of tax outstanding and payable by a taxpayer.
It is important to note that the TAA prescribed that a certified statement must be treated as a civil judgment lawfully given in a relevant court in favour of SARS for a liquid debt of an amount specified in the certified statement (section 174).
SARS may file a certified statement irrespective of whether the tax debt is subject to an objection or an appeal (in terms of Chapter 9 of the TAA). The only limit to its ability to do so, is if the obligation to pay the tax debt has been suspended, or 10 business days after SARS refuses to suspend payment have not expired (section 172(2) read with section 164(6)).
SARS has a fairly wide discretion in terms of section 172 applications, in that SARS can:
- amend the amount of the tax debt specified in the certified statement if, in SARS’ opinion, the amount is incorrect (section 175(1));
- withdraw a statement unilaterally, by sending notice to the clerk or registrar of the court (again note, not to the taxpayer) at which time the certified statement will cease to have effect (section 176(1)); and
- file a new certified statement including amounts which had been withdrawn (section 176(2)).
SARS, however, must withdraw a certified statement if this is requested by the taxpayer in the prescribed form and manner, and if they are satisfied that the taxpayer has paid the full amount of the tax debt set out in the certified statement filed under section 172 and has no other outstanding tax debts (section 176 of the TAA).
Should you or your business be notified by SARS of any civil judgments pending or finalised, we can assist.