When you cannot pay SARS

Do these first, in this order

1. File every outstanding return. SARS considers relief only once the non-compliance is remedied. Unfiled returns also keep the administrative penalty running at up to R16 000 a month.
2. Check whether the assessment is even right. If it comes from an estimated assessment because a return was missing, filing the real return can shrink the debt to nothing. If you dispute it, request a suspension of payment while the dispute runs.
3. Work out what you can genuinely pay every month. A defaulted arrangement is worse than no arrangement, because SARS treats a prior default as a reason to refuse the next one.
4. Then choose: arrangement, compromise, or both. A compromise is normally paired with a payment of the balance.

Option one: a payment arrangement

Section 167 lets a senior SARS official agree that the debt be paid in one sum later, or in instalments. Section 168 sets out when they may: where the deficiency is temporary and reasonably certain to be remedied, where anticipated income will satisfy the debt, where immediate collection would be uneconomical or harsh, or where you offer security.

• Where to request it: on eFiling from the statement of account, the notice of assessment, the work page, your compliance profile or a final demand.
• One tax type per arrangement. Income tax, company tax, PAYE, UIF, SDL, VAT and dividends tax each get their own.
• The term defaults to six months and can be set from one to 36 months.
• What a company must supply: three months of bank statements, cash flow projections, financial statements or management accounts, an asset register, and a debtors and creditors analysis. Short, small arrangements need less: SARS’s own practitioner material describes thresholds where supporting documents are not required.
• You cannot have a pending or active arrangement, or a previous default, and once submitted the request cannot be cancelled.
• Interest keeps running under section 187, daily and compounded monthly.

Option two: a compromise

A compromise permanently writes off part of the debt. Section 200 allows it where it secures the highest net return for SARS, judged against what liquidating you would actually yield. Section 202 says SARS weighs the savings in collection costs, earlier payment, a larger recovery than enforcement would give, and any tax benefits you give up, such as assessed losses.

Section 201 sets out what the written request must contain: a detailed statement of your assets and liabilities at fair market value, twelve months of income and expenditure, every asset disposed of in the past three years with who received it and your relationship to them, future interests in assets, connected persons, your expected income sources for the next three years and your financial plans, and the reasons for the request. You warrant that it is accurate.

Section 203 lists six situations where SARS may not compromise:

• You compromised a debt in the preceding three years
• Your other tax affairs are not up to date
• Another creditor has started or threatened liquidation or sequestration
• Other creditors would be prejudiced, or would be unfairly advantaged
• It would prejudice broader taxpayer compliance
• For a company or trust, SARS has not first explored recovery from the people personally liable under Chapter 11, such as directors whose negligence caused the non-payment or shareholders who received assets

The request goes to SARS’s Independent Debt Committee. Since October 2025 SARS also runs an expedited process for undisputed debts older than twelve months, aiming to resolve them within four weeks, excluding entities in liquidation, business rescue, deregistration, audit or criminal investigation.

Option three: get the penalties remitted

Penalties are often a large part of the balance and they are separately challengeable. A request for remission on eFiling covers the administrative non-compliance penalty of R250 to R16 000 a month, the late payment penalty and the underestimation penalty. The grounds SARS recognises are a first incidence with reasonable grounds now remedied, or exceptional circumstances: a natural or human-made disaster, civil disturbance, a serious illness or accident, a serious emotional or mental distress, an act by SARS itself, or serious financial hardship. If remission is refused you can object and then appeal.

What SARS does if you do nothing

• A final demand giving ten working days to pay or make an arrangement.
• A third-party appointment under section 179. SARS notifies anyone holding money for you, most often your bank, your employer or your debtors, to pay it over. The third party becomes personally liable if it parts with the money instead. For salaries this arrives at the employer as an AA88 notice, and SARS may extend the period to allow for basic living expenses.
• Civil judgment and a warrant of execution, which puts the debt on your credit record and sends the sheriff to attach assets.
• Liquidation or sequestration. SARS applies as a creditor, and in a liquidation the liquidator becomes the public officer and must file every outstanding return anyway.
• Personal liability. Chapter 11 lets SARS pursue directors and shareholders where financial management negligence or asset stripping caused the shortfall.

Frequently asked questions