Red Ants 'win back' tax compliance status in legal wrangle with SARS

2018-05-21 20:09
File photo: The Red Ants evicting shack dwellers along the freeway in Lenasia. (Supplied)

File photo: The Red Ants evicting shack dwellers along the freeway in Lenasia. (Supplied)

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The South African Revenue Service (SARS) has been given 24 hours to restore the tax compliance status of Red Ant Security Relocation and Eviction Services, the company known for the tearing down of illegally-erected houses, which could collapse without the critical compliance status.

This is in accordance with an order in the Pretoria High Court on Monday in a case in which the company is the applicant.

Without the compliance status, the Red Ants will not be able to receive payment or tender its services.

The Red Ants also provide other services, including temporary access to water to residents in need.

The judgment was delivered in on Monday following an urgent application, which shed light on the company's financial situation.

'On the brink of closure'

"It was not disputed the applicant's business was on the brink of closure and that some 11 000 employees' jobs are at risk and that nine municipalities will be left without business if the applicant's business ceases to operate," it said.

The judgment said the Red Ants had sought an urgent interdict to have its tax compliance status reinstated so that it could generate a tax clearance certificate. This, after SARS did not notify the company before revoking this status, which the service said had in fact, simply lapsed.

"It is common cause between the parties that no notice was given of the intention to revoke the applicant’s tax compliance status," the judgment said.

"The failure to provide any notice, forms the subject matter of the review application."

'Outstanding tax liability'

However, SARS said the prior notice was not necessary as a payment deferral agreement had lapsed at the end of March and there was an outstanding tax liability for which no agreement had been made.

SARS said it did not revoke the Red Ants' tax compliance status, but this had "lapsed by operation of law". 

It said that it had no duty to notify the Red Ants because the deferral agreement only remained in place for the term agreed upon.

"It argued that once the agreement issued lapsed by operation of law, the applicant was no longer entitled to a tax clearance certificate because of its outstanding tax liability," the judgment said.

"This outstanding tax liability is in dispute between the parties."

As part of its court documents, SARS had handed up an unsigned letter dated November 14, 2017, which was different to a signed letter dated four days earlier, confirming the approval of the Red Ants' deferred payment request and an additional amount of R37 000 fell under this agreement.

There was no affidavit explaining the difference in these two letters.

The court had found the matter was indeed an urgent one, while SARS had found this urgency was self-created.

Most income from providing public service

"It is undisputed that 96% of the applicant's income is generated from the provision of public services to public and municipal entities, including essential services such as emergency accommodation and temporary water supply," the judgment said.

"Absent a valid tax clearance certificate, the applicant cannot receive payment for its services, nor tender to provide new services thus creating severe financial constraints."

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