Category: News Flash | Debt SAICA SAIPA SAIT SARS Tax Tax Practitioner CIBA Compromise
For tax practitioners registered with Recognised Controlling Bodies (RCBs) like SAICA, SAIPA, or CIBA, the SARS Expedited Tax Debt Compromise Process (launched September 30, 2025) presents a high-stakes opportunity to assist clients with aged, undisputed debts while navigating a compressed timeline. With EOIs open and formal applications starting October 13, this practitioner-led initiative under sections 194–204 of the Tax Administration Act (TAA) demands precision to secure approvals within four weeks. Outstanding debts tied to RCB clients exceed R96 billion, making proactive client screening essential to drive recoveries and compliance. Below, we outline key requirements, procedural steps, risks, and strategic tips.
Core Requirements: Rigorous Standards for Eligibility and Assessment
Practitioners must verify client fit against TAA criteria to avoid rejections, emphasising full recovery improbability and fiscus best interests. Key qualifying elements:
- Debt Profile: Non-disputed (disputes withdrawn pre-application), >12 months outstanding, and mutually acknowledged by taxpayer and SARS.
- Taxpayer Compliance: All returns submitted and assessed; no insolvency, sequestration, death, business rescue, or CIPC deregistration proceedings.
- Financial Viability: Demonstrated inability to settle in full, via comprehensive disclosures including market-value assets/liabilities, 12-month historical income/expenditure, and 3-year projections. Include contingent liabilities, recent disposals (>R50,000), trusts, and creditor consents where applicable.
Exclusions to flag immediately:
- Fraudulent/evasive origins, criminal probes, or avoidance arrangements.
- Active audits, suspensions, temporary write-offs, or compromises within 3 years.
- Viable payers refusing settlement or cases prejudicing creditors sans agreement.
Practitioners are encouraged to leverage resources available to them through their respective RCB’s resources for confidential guidance and error-proof submissions. Incomplete or inaccurate applications will be rejected outright, as SARS stresses: "Disclosures are accurate, failing which SARS may not even consider such applications."
Eligibility Factor | Qualifying Examples | Exclusions |
---|---|---|
Debt Age & Status | >12 months, undisputed | Disputed or <12 months |
Taxpayer Status | Compliant returns, not insolvent | Under audit/investigation, business rescue |
Financial Proof | Inability to pay full (e.g., ceasing trade) | Means to pay but unwilling |
Debt Origin | Standard tax liabilities | Fraud/criminal-related |
Procedural Framework: Step-by-Step Execution for Practitioners
Tax Practitioners must ensure that submissions are exhaustive and accurate. Here's how it unfolds:
- Expressions of Interest (EOIs): Immediately submit EOIs via email to Compromisecampaign@sars.gov.za. Include client names, tax numbers, and a brief indication of interest. This phase is open now, allowing SARS to prioritise high-volume cases.
- Formal Application Submission: Open October 13 and close December 31, 2025, via eFiling portal or branches. Compile and upload:
- Financial statements (balance sheet, P&L, cash flow).
- Supporting docs: 12-month bank statements, creditor confirmations, asset valuations, and proposed compromise (lump sum or ≤6 instalments).
- Details of recent asset disposals, trusts, or contingent interests.
- Bank statements, financials, creditor letters, and a motivation letter proposing the settlement amount.
- Proof of compliance (e.g., filed returns).
- Propose realistic offers (e.g., 15–85% of principal, per hardship), justified by projections.
- SARS Review and Outcome: SARS aims for a four-week turnaround on complete applications. If more info is needed, respond within 21 days or risk withdrawal. Upon approval, pay the agreed amount to waive the balance. Settlements can be a lump sum or up to six instalments. Enforce instalment adherence; defaults reinstate full debt + penalties/interest.
Strategic Considerations: Risks, Deadlines, and Optimisation
Deadlines:
- EOIs: Open immediately - no fixed close but submit promptly.
- Formal Applications: October 13 to December 31, 2025.
- Post-Deadline: Escalated enforcement (judgments, executions) for non-participants.
Risks:
- Rejection/Withdrawal: 70%+ from incompleteness – double-check docs.
- Default Penalties: Full reinstatement + 10% admin fee.
- One-Off Restriction: 3-year bar on repeats.
- Practice Impacts: Volume surge; allocate resources, use RCB webinars for training.
Best Practices:
- Identify Clients: Audit files now for aged debts; educate on benefits.
- Documentation: Use checklists; digitise for speed.
- Collaboration: Partner with RCBs for templates/guidance.
- Ethical Notes: Uphold TAA confidentiality; report suspected non-disclosures.
DISCLAIMER
Nothing in this article and/or post should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure accuracy, Tax A Sured (Pty) Ltd does not accept any responsibility for consequences of decisions taken based on this article and/or post. It remains your own responsibility to consult the relevant primary resources when taking a decision.