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:
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 –
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 following documentation and or statements will have to be submitted in support of the application for 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:
In terms of Part B – Proposals the following information is required:
In terms of Part C – Assumptions and conditions the following information is required:
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:
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:
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.
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