Sars issues taxpayer with final demand for one cent

It's not the first time the taxman's automated collection machinery has produced bizarre and sometimes damaging results. A taxpayer contacted Moneyweb after receiving a final warning from the South African Revenue Service (Sars) for the princely sum of one cent, with an instruction to settle the outstanding amount within 10 business days. Along with the final demand came further instructions. The taxpayer could: Apply for a deferral of payment; Declare a dispute and suspend the debt; Apply to ‘compromise’ a portion of the debt (come to a settlement); or Apply for a waiver of penalties provided the capital portion of the debt is paid. “I can only imagine this was an AI-generated letter from Sars,” says the taxpayer, who asked not to be named but supplied the demand letter with the identifying details removed. “It makes one wonder whether there is any human oversight in many of the letters being sent out. Clearly, this is an error and a terrible waste of taxpayer money by the organisation entrusted with collecting our taxes.” This is not the only bizarre situation. R323 000 refund promised then refused In this case, the taxpayer went into a Sars branch and the matter was escalated. Neither his accountant nor the Sars consultant in the branch could understand why the refund was blocked, so the matter was escalated. The taxpayer thought it was payback for making fun of Sars on social media in previous years, but it turns out he was found to be R50 behind on his PAYE tax profile – the cost of a cappuccino. A refund of R323 000 appears to have been blocked by Sars over a claimed debt of R50. “Despite paying over R1 million in tax, I was non-compliant over a flat white. And I said to the manager, you wonder why people do everything to avoid you guys,” says the taxpayer. The good and the bad Speaking last week at the Money Summit, Sars Commissioner Dr Johnstone Makhubu described the agency’s recovery from near-collapse during the State Capture years, largely due to enhanced collection efforts. Sars collected more than R2 trillion in 2025/26 – its best performance in nearly three decades – with revenue growing 8.4%, well ahead of the economy. Makhubu credited the turnaround partly to rebuilding skills and increasingly sophisticated use of data and technology. The one-cent final demand points to the other side of that increasingly powerful collection machine. What happens when automated enforcement is unleashed without apparent human intervention of common sense? More errors Sometimes these mistakes are far from trivial. They can, and have, run into millions of rands, with dire consequences for taxpayers and threatening the survival of businesses. In 2022, Moneyweb reported on the case of a taxpayer being slapped with an assessment of R8.4 million for the 2016-2018 tax years. The taxpayer disputed the assessments and applied for a suspension of payment while the dispute was being resolved. The Tax Administration Act generally prohibits the commencement of recovered proceedings while a dispute is underway unless it reasonably believes the taxpayer may attempt to dissipate assets. Sars issued a final demand anyway, and insisted that the disputed debt had to be paid before the taxpayer could be considered tax compliant. This jeopardised the company’s ability to secure export permits, bank credit facilities and government funding. In a damning judgment, the court found Sars had “failed dismally” in its obligations and displayed an “egregious lack of regard” for the taxpayer’s constitutional right to fair administrative action. Final instead of friendly … Back in 2013, Moneyweb also reported on the story of Sars sending out final demands instead of reminders. Sars quickly corrected that mistake, admitting to taxpayers “we unfortunately issued you with a final demand letter instead of a friendly reminder”. The problem with these seemingly petty claims against taxpayers of R50 or one cent is that they can set in motion some of Sars’s formidable powers of collection. If the alleged debt remains unpaid, Sars can instruct a third party such as a back or employers to recover the funds directly from a taxpayer’s funds or salary without first obtaining a court order. As the taxpayer who received the one cent final demand notes, it’s not the debt in question that is worrisome – it is the enforcement action that follows that could be ruinous. This article was republished from Moneyweb. Read the original here.