In one of the largest individual tax settlements in recent memory, Hudaco Industries will part with R312 million in final settlement of a tax debt that has been hanging over the industrial and electronics group for almost two years.
Although it indicated the tax bill was not its fault, the group’s board said on Friday it would rather pay up and avoid protracted litigation and move forward in the “current difficult trading environment”.
The amount to be paid is less than a quarter of the R1.9 billion assessment the SA Revenue Service (Sars) raised against the group, but is second only to the R706.7 million paid by businessman Dave King in 2013 after years of litigation. It is also more than the R250 million Nampak paid in 2007.
Hudaco financial director Clifford Amoils said he did not want to add to the company’s announcement.
Hudaco’s assessment arose after its R2.2 billion empowerment deal, which placed 15% of the company in black hands, debt-free, in 2007.
The deal itself was not problematic, but Hudaco says its corporate advisers entered into a series of transactions related to the deal without the company’s knowledge. Sars eventually uncovered the complicated web, which essentially showed that cash had flowed in a circular manner and there was no real external funding.
“In discussions with Bravura Equity Services since the issuing of assessments ... the existence of the wider funding transaction was confirmed,” said the Hudaco board. “Hudaco will evaluate its prospects of recovery in this context in due course.”
Bravura executive director Ian Matthews said his firm was studying the content of Hudaco’s announcement.
“Once we have considered the announcement, we will be taking advice and will respond thereto shortly.”
Hudaco has already paid R120 million under Sars’ “pay now, argue later” principle and said the balance of R192 million would be due in March.