High Court Confirms SARS Can Issue Third-Party Notice Without Final Demand
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In Cuba Dumakude v Bidvest Bank Limited and Another (054716/25), the Gauteng High Court considered whether an individual could force the release of funds frozen in his bank account after his bank received information that money transferred into the account was linked to an allegedly fraudulent SARS VAT refund.
The court ruled in SARS's favour on 8 September 2026.It confirmed that SARS may issue a third-party notice under section 179 of the Tax Administration Act without first sending a final demand where a senior SARS official is satisfied that issuing the final demand would prejudice the collection of the tax debt. The judgment is a clear reminder for practitioners that moving money from one account to another does not place it out of SARS's reach.
The background: a refund that moved fast
The story starts with a company, not with Mr Dumakude. Hill Side Trading and Projects CC submitted VAT returns claiming a refund of about R3.28 million. SARS paid the refund on 13 February 2025, and four days later the company moved R900 000 from its Capitec account into a Bidvest Bank account belonging to Mr Dumakude.
Capitec then warned other banks that Hill Side Trading was linked to fraud against SARS, and Mr Dumakude's Bidvest account was frozen. He had no access to R448 838.35 from around 20 February 2025.
SARS then looked closer. The suppliers named on the invoices said under oath that the invoices were fake and that they had never done business with the company. The company's registered business address turned out to be a daycare centre. SARS launched its investigation on 1 April 2025. On 8 April, SARS issued a third-party appointment to Bidvest Bank under section 179 in respect of R450 995.51. On 10 April, SARS issued a further notice appointing Bidvest as a third party in respect of the R900 000 transferred from Hill Side Trading.
What was in dispute
The dispute centred on three main issues:
whether SARS was right to issue a third-party notice to Bidvest Bank,
whether SARS was right to skip the final demand before issuing it, and
whether Mr Dumakude had a right to the money held by the bank.
His argument was simple. He said the freeze was unlawful, that SARS could not use a third-party notice because he was not the taxpayer who owed the money, and that SARS never sent a final demand.
The final demand point matters. Normally, SARS may only issue a third-party notice after giving the tax debtor a final demand at least 10 business days earlier. But section 179(6) lets SARS skip that step if a senior official is satisfied that a warning would put collection of the debt at risk.
The outcome: SARS wins on every point
The Gauteng High Court judgment, handed down on 8 September 2026, went against him on all three issues.
The notice was not aimed at him. The court found that Hill Side Trading was the tax debtor, and Bidvest Bank was the third party holding the funds.
No final demand was needed. The evidence established that Hill Side Trading had submitted falsified VAT returns and that the refund was not properly payable. The applicant's account had already been frozen because the funds were at risk of being dissipated if not secured. The court therefore found that issuing a final demand to Hill Side Trading would have prejudiced collection of the tax debt. The notice was valid, and Bidvest had to comply. The court also found that Bidvest could freeze the account under its own terms and conditions.
He could not show the money was his. He produced no invoices, delivery notes or contract to explain the R900 000. The account had been dormant, and large cash withdrawals and purchases followed the deposit. The court found the funds were proceeds of unlawful activity and that he had no clear right to them.
One caution. This does not give SARS unlimited power to take money from anyone just because it can be traced to a tax debtor. The result turned on the facts: a fraudulent refund, fake invoices, money moving quickly, and a recipient who could not justify the payment.
What this means for you as a practitioner
Paperwork is protection. If a client receives a large payment, they must be able to prove why. The absence of invoices, delivery notes or a contract meant that Mr Dumakude could not demonstrate legitimate business dealings with Hill Side Trading that justified the R900 000 payment.
SARS may not warn you first. SARS may not issue a final demand first. Where a senior SARS official is satisfied that a final demand would prejudice collection of the tax debt, section 179(6) allows SARS to proceed without it. The section 179 notice is issued to the third party holding or owing money to the taxpayer. Your client may only find out when the bank freezes the account.
Act fast, and bring SARS into it. The application was initially brought before the urgent court but was removed from the roll to allow Mr Dumakude an opportunity to join SARS as a party. If a dispute involves SARS, practitioners should ensure that SARS is properly joined where its interests are directly implicated. If a freeze involves SARS, deal with SARS directly and quickly.
Check the VAT invoices you file. If you prepare VAT returns, fake supplier invoices can put your name next to a fraud. Accounting Weekly has covered how courts judge practitioners who push questionable refunds. Verify suppliers before you claim.
Know when SARS gets it wrong. Not every third-party appointment is valid. If a third-party appointment is disputed, practitioners should obtain advice on the taxpayer's available remedies and engage SARS promptly.
