Closing down a business

[HR Solutions]

I thought SARS had an automatic personal surety from directors/members on debts owed to them?

They do ...... not sure how this guy got away with it, but hey come second after employees.

[Justloadit]

He may just not be aware of it, but when you register as the public officer, you automatically become personally responsible for any outstanding taxes.
This is the reason, that one must be extremely careful when accepting this position in a company. If you are not personally responsible for the finances in the company, then DO NOT ACCEPT this responsibility!

[Andromeda]

Hi Busfact

If the business in liquidation has SARS as a creditor as a result of an assessment, whether arising from self assessment or by them, then that amount is claimed from the insolvent estate.

On the other hand, assume the entity had not submitted returns for a number of periods, SARS will not attempt (and I doubt they are able to) claim amounts from the estate in respect of those non submissions.
In other words they will only claim amounts that have been raised by assessment but that are unpaid.

[Greig Whitton]

He may just not be aware of it, but when you register as the public officer, you automatically become personally responsible for any outstanding taxes.

Rubbish. This is precisely the sort of myth that SARS loves to see propagated so that they can scare representative taxpayers into assuming personal liability. Section 155 of the Tax Administrative Act clearly sets out the circumstances under which a public officer (or other representative taxpayer) can be held personally liable. It is most certainly not automatic.

[HR Solutions]

I notice that have answered quite strongly about a public officer but not about the SARS issue ??

[Andromeda]

I have posted correct information, perhaps that is the reason?

[Justloadit]

Rubbish. This is precisely the sort of myth that SARS loves to see propagated so that they can scare representative taxpayers into assuming personal liability. Section 155 of the Tax Administrative Act clearly sets out the circumstances under which a public officer (or other representative taxpayer) can be held personally liable. It is most certainly not automatic.

Maybe I misunderstood this as being part of any company.

ACT
To amend the Marketable Securities Tax Act, 1948, so as to take into account the
consequential amendments as a result of the amendment to the corporate
restructuring rules; to amend the Transfer Duty Act, 1949, so as to amend certain
definitions to ensure that the acquisition of a contingent right in a trust and the
acquisition of shares in certain companies are subject to transfer duty; to provide
that the person disposing of the contingent right or shares in the company and the
trustee and public officer of the company shall be jointly and severably liable for
the duty;

and here

Amendment of section 3 of Act 40 of 1949, as substituted by section 4 of Act 88 of
1974 and amended by section 1 of Act 99 of 1981 and substituted by section 4 of Act
97 of 1993 and section 10 of Act 37 of 1996 and amended by section 6 of Act 60 of
2001
3. (1) Section 3 of the Transfer Duty Act, 1949, is hereby amended by the addition of
the following subsections:
‘‘(1A) Where a person who acquires any property contemplated in paragraph (d)
or (e) of the definition of ‘property’ fails to pay the duty within the period
contemplated in subsection (1), the public officer as defined in section 101 of the
Income Tax 1962 (Act No. 58 of 1962), of that company and the person from whom
the shares or member’s interest are acquired shall be jointly and severally liable for
such duty: Provided that the public officer or person from whom the shares or
member’s interest was acquired, may recover any amount of duty paid by him or
her in terms of this subsection from—
(a) the person who so acquired that property; or
(b) in the case of a public officer, from that company.

[Justloadit]

I may also have misinterpreted this section

THE IMPORTANT ROLE OF THE PUBLIC OFFICER IN A COMPANY
Has your company* appointed a public officer and notified
SARS of the appointment?
The Income Tax Act requires that all companies have to
appoint a public officer. The appointment must be made within
one month of the company commencing business activities, or
acquiring an office in the Republic. Where there is a change of
public officer, the company must notify SARS within 14 days
of the change taking effect.
Failure to do so may result in hefty penalties, and SARS will,
by default, designate a director, member, or company
secretary as the public officer. In addition, the nonappointment
of a public officer does not exonerate the company from complying with the
provisions of the Income Tax Act.
The role of the public officer is of extreme importance in a company. He is the “face of the
company” for tax purposes. All actions carried out in his capacity as a public officer are
deemed to have been done by the company.
His duties are to attend to the tax affairs of the company, including (but not limited to)
attending to the submission of annual and provisional tax returns, registration of the
company as taxpayer and employer, submission of employee tax, monthly declarations, and
acceptance of notices served against the company. He should be empowered by the
company to properly fulfil these duties.
By signing returns, the public officer declares that all the information provided therein is true.
Where the information is found to be false, action may be taken against the public officer in
his personal capacity.

[Justloadit]

I picked this up from The Public Officer: A Vital Appointment

Public Officers and their risk of personal liability

The Public Officer is subject to penalties for “the company’s defaults” and, as a “representative taxpayer” risks further liability in terms of the Tax Administration Act. For example, Public Officers risk liability for tax due to SARS to the extent that they concluded transactions or had control of income or received income from the company. They are also personally liable if tax is due to SARS and they divert or dispose of monies or assets which could have been used to settle the tax. There are differences of opinion in legal circles as to exactly how far these risks of personal liability go, but they are real risks.

[Greig Whitton]

Maybe I misunderstood this as being part of any company.

and here

I may also have misinterpreted this section

I picked this up from The Public Officer: A Vital Appointment

Everything you posted directly reinforces my point: a public officer (or other representative taxpayer) can only be held personally liable under specific circumstances.