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what we offer

TAX DEBT ASSISTANCE

Barnard Incorporated is a firm of attorneys that specializes in various fields of law that includes tax restructuring and tax debt management that varies from:


  • handling of assessments;

  • filing of objections to the assessments

  • tax health checks

  • Negotiations of payments with SARS and in certain instances, we also approach SARS for a form of compromise of debt in terms of Section 200 of the Tax Administration Act as well as installment payment agreements in terms of Section 167 of the Tax Administration Act. Where the debt has gone further than only tax disputes, we also attend to compromises in terms of Section 155 of the Companies Act.


Our firm has attended to numerous Section 200 (Income Tax Act) compromises as well as Section 155 Compromises structuring repayment plans for your companies’ entire debt allowing to continue to trade in circumstances not in contravention of the Companies Act.


The following are circumstances under which a Section 167 Installment payment agreement will be considered by SARS:


A senior SARS official may enter into an agreement with a Taxpayer (hereinafter referred to as the Debtor) in the prescribed form under which the Debtor is allowed to pay a tax debt in one sum or in installments, within the agreed period if satisfied that –


  • Criteria or risks that may be prescribed by the Commissioner by public notice have been duly taken into consideration ; and

  • The agreement facilitates the collection of debt.


The following are circumstances under which Section 200 compromises will be considered:


A senior SARS official may authorize the Compromise in terms of Section 200 if the purpose of the compromise is to obtain the highest net return in the recovery of the tax debt and the compromise is consistent with considerations of good tax management and administrative efficiency. Further the Debtor will only be eligible for a compromise if:


  • The Debtor has not been a party to a compromise agreement in the three years preceding the current request;

  • The tax affairs (all requests on e-filing and the like) are up to date;

  • No creditor has communicated its intention to initiate or has initiated liquidation or sequestration proceedings;

  • The compromise will not prejudice other creditors;

  • The compromise will not adversely affect other obligations of the tax payer;

  • The senior SARS official has explored the action against or recovery from the personal assets of persons who may be liable (in terms of Section 179 to 183 of the Act, being certain third parties, persons responsible for the financial management of the debtor and shareholders) for the tax debt and n


The following documentation and or statements will have to be submitted in support of the application for compromise:


  • The assets and liabilities of the debtor and their current market value;

  • Income received and accrued and expenditure incurred in the 12 months preceding the application;

  • Full details of all assets disposed of in the preceding 3 years;

  • Details of any future interest in any assets;

  • Details of any assets over which the debtor has a power of appointment or disposal of;

  • Details of any connected persons (directors, shareholders, associated companies within a group) or entities in relation to the debtor;

  • The debtor present and anticipated sources of income;

  • The Reasons for seeking the compromise.


In the event that the above information and documents are submitted and the senior SARS official has considered the application, the senior SARS official will formulate a proposal on behalf of the debtor and submit the application and all supporting documents to a Compromise Committee for consideration. In the event that the application is approved, the debtor will sign an agreement to regulate the amounts payable in settlement of the debt any other conditions which the senior SARS official and the Compromise Committee deems necessary.


The following are circumstances under which Section 155 will be considered:


A compromise in terms of Section 155 of the Companies Act No. 71 of 2008 (as amended) will be considered where a company cannot meet its debt as it becomes due but will be able to do so if its creditors agrees to a compromise of its current and historic debt due to those creditors.


The compromise proceedings takes place between the board of directors and its creditors and such a compromise will result in an arrangement between the company’s board of directors and its shareholders regarding payments of debts due to its creditors.


The company will offer the creditors a certain percentage of their debt due to be paid over an agreed time.


A compromise contains three separate sections required for consideration.


In terms of Part A- Background the following information is required:


  • A complete list of all the material assets of the company, as well as an indication as to which assets are held as security by creditors as of the date of the proposal;

  • A complete list of the creditors of the company as of the date of the proposal, as well as an indication as to which creditors would qualify as secured, statutory preferent and concurrent in terms of the laws of insolvency, and an indication of which of the creditors have proved their claims;

  • The probable dividend that would be received by the creditors, in their specific classes, if the company were to be placed in liquidation,

  • A complete list of the holders of the company issued securities, and the effect that the proposal would have on them, if any; and

  • Whether the proposal includes a proposal made informally by a creditor of the company.


In terms of Part B – Proposals the following information is required:


  • The nature and duration of any proposed debt moratorium;

  • The extent to which the company is to be released from the payment of its debts, and the extent to which any debt is proposed to be converted to equity in the company, or another company;

  • The treatment of contracts and ongoing role of the company;

  • The property of the company that is proposed to be available to pay creditors’ claims;

  • The order of preference in which the proceeds of property of the company will be applied to pay creditors if the proposal is adopted; and

  • The benefits of adopting the proposal as opposed to the benefits that would be received by creditors if the company were to be placed in liquidation.


In terms of Part C – Assumptions and conditions the following information is required:


  • A statement of the conditions that must be satisfied, if any, for the proposal to-
     
    • Come into operation; and

    • Be fully implemented;

  • The effect, if any, that the plan contemplates on the number of the employees, and their terms and conditions of employment; and

  • A projected-
     
    • Balance sheet for the company; and

    • Statement of income and expenses for the ensuing three years, prepared on the assumption that the proposal is accepted.
       
      • The statement of income and expenses must include a notice of any significant assumptions on which the projections are based; and

      • May include alternative projections based in varying assumptions and contingencies.


The final proposal must conclude with a certificate by an authorised director or prescribed officer of the company stating that any factual information provided appears to be accurate, complete and up to date and projections provided are estimates made in good faith on the basis of factual information and assumptions as set out in the statement.


The proposal should be fair and as far as possible give all the information reasonably required to enable the recipients to vote for such a compromise to succeed.


Section 155(2) of the Act states that the proposal, information regarding the proposal and a notice of the meeting to consider the proposal must be delivered to the particular creditors and to the Commission. The Act does not address how long before a meeting of creditors such documentation should be sent but does allow the company to set its own reasonable notice period in the proposal.


Once the proposal is delivered a meeting of creditors will be called.


The Act provides that the proposal will be adopted at a meeting of creditors or members of a class of creditors if 75% (seventy-five percent) of creditors (in value) present at the meeting vote in favour of the compromise.


The company may apply to court to sanction the compromise if same is accepted by the creditors and this is recommended as such a sanctioned compromise will be binding on all the creditors or all of the members of the relevant class of creditors, as the case may be.


The court order sanctioning the compromise will only become binding on all parties when it has been filed with the Commissioner. Section 155(8) of the Act provides that copy of the court order sanctioning the compromise must:


  • Be filed by the company within 5(five) business days);

  • Must be attached to each copy of the company’s Memorandum of Incorporation that is kept at the company’s registered office, or elsewhere as contemplated in section 25; and

  • Is final and binding on all of the company’s creditors or all of the members of the relevant class of creditors, as the case may be, as of the date on which it is filed.


It is important to note that a scheme or compromise entered into cannot in any way effect the liability of a surety of the company to any creditor (Section 155(9) of the Act).


Once the compromise is sanctioned the company will need to pay the creditors the debt due as per the agreed upon moratorium.


The team that assists in the Tax Department are the following individuals:


  • Gerhard Truter (LLB ad H-Dip Tax)


Contact us to request a callback or alternatively send us an email with your requirements and needs so we can start the road to restoring your tax compliance status. A list of services, down payment arrangements, tax settlements, debt compromises with SARS and curators in general, VAT recoups.


SUMMARY

We offer tax debt solutions on all matters relating to SARS as well as total company debt solutions where the company is in total distress. We aim to achieve solutions that will allow your business to continue trading. Let us remove the confusion and stress by managing this process on your behalf. As long as there is a plan there is a solution.

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