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Nugent inquiry hears of possible motive for disbanding Sars' enforcement units

The session focused on the collapse of enforcement capability in the Revenue Service, and such investigations were handed over to an audit unit.

FILE: Retired judge Robert Nugent pictured on 2 July 2018. Picture: EWN.

JOHANNESBURG - Questions have emerged over the possible motive for disbanding the Revenue Service’s enforcement units, with suggestions there may be criminal intent.

This was among the submissions at the Nugent Commission of Inquiry, which is sitting in Pretoria on Wednesday.

Retired Judge Robert Nugent has been tasked with investigating tax administration and governance over a four-year period starting in 2014.

The session focused on the collapse of enforcement capability in the Revenue Service, and such investigations were handed over to an audit unit.

Former South African Revenue Services (Sars) investigations manager Keith Hendrikse says after their unit was shut down, an audit unit interfered in a case involving a prominent Cape Town figure, who owed the state about R400 million.

“That prevented Sars from collecting any money for two years. To date, that the taxpayer has not paid one cent. That was, to my mind, a deliberate attempt to derail that process.”

Commissioner Michael Katz asked Hendrikse for clarity.

“Is the suggestion that was done to benefit that taxpayer?”

To which Hendrikse responded: “That is my suggestion. Probably one of the biggest crimes in South Africa.”

Nugent has asked the evidence leader to question the auditor who interfered in this case.

ENFORCING TAX COMPLIANCE

Several witnesses at the Nugent Commission of Inquiry have described how the decimation of the Revenue Service’s enforcement units has left the organisation without the capacity to investigate cases of non-compliance.

Head of the enforcement unit Pieter Engelbrecht was asked whether the new operating model created inefficiencies in the ability to enforce tax compliance.

“It created a deficiency in our capability to execute and operate within the illicit economy.”

Evidence leader advocate Carol Steinberg read out an affidavit to Hendrikse, which described the effect of the disbandment on new tax compliance investigation cases.

“She says for the last couple of years there’ve been no cases generated, and that’s the result of this capacity not being moved but being shut down. She says there had very little to do.”

The hearings resume on Thursday.

(Edited by Zamangwane Shange)