Millionaire, David King, entered into a plea agreement after appearing in the Palmridge Regional Court yesterday.
Businessman, David King, reached a R706 million payment agreement with the South African Revenue Service (SARS) yesterday (29 August) following his submissions made to SARS.
In response to the settlement agreement, King said that when the tax dispute arose years ago, he took a conscious decision not to co-operate with the authorities.
“That was a mistake. I regret not engaging with the State sooner as I have found them to be extremely firm but fair in their dealings with me once I fully engaged with them. I accept the fact that I have been non-compliant in the past and will rectify this,” said King.
According to reports, King testified that he falsely stated in his tax returns that neither he nor his children were beneficiaries of a trust when in fact they were beneficiaries of the Caledonia Trust. King, known as the ‘Tax Rebel’ also refused to file tax returns since 2002.
The millionaire initially had to pay a R3.208 m or face two years in jail.
He entered into a plea and sentencing agreement with the National Prosecuting Authority after appearing in the Palmridge Regional Court yesterday.
Tax evasion in the spotlight
Julius Malema, leader of the Economic Freedom Fighter(EFF), was recently also in the news regarding tax evasion after SARS investigations found that he failed to register for tax in 2005.There were also discrepancies in his declared income between 2005 to 2011. As a result, Malema was assessed for R16 million.
Marc Sevitz, co-founder of online virtual tax assistant, TaxTim, said there is a loophole in the legislation and some high income individuals, work around it to use assets and liabilities to minimize tax liabilities. Trusts, like those used by King, used to be a popular way some people would hide their money from the taxman.
“Some companies would even help people to hide their money from the taxman, but these cases are becoming fewer thanks to a worldwide clampdown on tax evasion. Tax authorities all over the world are communicating with each other making it harder for people to get away with hiding their money in international tax havens,” said Sevitz.
What can you do about tax debt?
Gene Ravele, SARS Chief Officer for Tax and Customs Enforcement Investigations, said the outcome of King’s case demonstrates that SARS remained approachable to any taxpayer who wants to resolve a tax dispute in a bona fide manner, even when formal processes of litigation are before the courts.
Sevitz said that because SARS has an approachable stance, you should play open cards with them when you are unable to pay your tax debt.
“You could come to an agreement with them if you can’t pay by explaining your situation up front. But the longer you wait, the harder it will be to do this. SARS also do not take kindly to situations where a declaration is incorrect due to a lie, rather than a mistake. You can face a penalty of 200% of the amount due plus interest,” said Sevitz.
