High Court holds new company liable for old company's R1.5 billion tax debt
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The High Court in Pretoria has declared that a company which took over a business for nil consideration is jointly and severally liable for the previous owner's tax debt of R1,499,692,534.63, plus interest. The judgment in CSARS v Africa Cash and Carry (Crown Mines) (Pty) Ltd and Africa Cash and Carry (Pty) Ltd (case 42076/2022) was handed down on 2 October 2026. SARS listed it on its website on 5 October 2026.
The parties
Africa Cash and Carry (Pty) Ltd (ACC): the original taxpayer.
Africa Cash and Carry (Crown Mines) (Pty) Ltd (Crown Mines): the company that took over ACC's business.
The facts
SARS assessed ACC for income tax and VAT for the tax periods 1 March 2002 to 28 February 2009. The Supreme Court of Appeal dismissed ACC's appeal on 21 November 2019, and the assessments became final on 13 December 2019.
On 31 December 2013, ACC sold its business as a going concern to Crown Mines for nil consideration, effective 31 October 2013. The tax debt was left out of the schedule of the sale agreement.
Crown Mines carried on the same business from the same premises, with the same staff, systems, suppliers and bank accounts.
In September 2015, Crown Mines' attorney wrote to SARS accepting liability for ACC's tax debt once the appeal was finalised. Crown Mines later denied liability.
What the court decided
The written undertaking binds Crown Mines. The attorney had authority to give it, and its conditions were met once the Supreme Court of Appeal confirmed the assessments.
Abuse of a separate legal entity. Under section 20(9) of the Companies Act, the court found that Crown Mines' incorporation and the transfer of ACC's business were an "unconscionable abuse" of its separate legal personality. For recovering ACC's debt, Crown Mines is treated as if it were not a separate legal person.
The debt has not prescribed. The court held that section 171 of the Tax Administration Act (TAA) applies. It allows SARS 15 years to start proceedings to recover a tax debt, and it overrides the three-year period in the Prescription Act. The court added that the debt would not have prescribed even on a three-year period, because the undertaking only became enforceable on 13 December 2019 and SARS applied on 2 November 2022.
Sections 182 to 184 of the TAA. These sections cover a person who receives assets from a connected taxpayer for no or less than fair value. Because the court upheld the undertaking, it did not need to decide SARS's alternative claim under these sections. It found Crown Mines had substantive notice of its possible liability.
The order
Crown Mines is jointly and severally liable with ACC for ACC's tax debt for 1 March 2002 to 28 February 2009: R1,499,692,534.63, with interest from 21 November 2019.
For recovering that debt, Crown Mines is deemed not to be a separate juristic person.
Both companies must pay the costs on the attorney and client scale, including the costs of three counsel.
Points for practitioners
Moving a business to a new, connected company for nil consideration while a tax debt is outstanding does not put the debt out of SARS's reach.
A written undertaking to SARS to pay another entity's tax debt can be enforced against the company that gave it.
For recovery of a tax debt, the TAA allows SARS 15 years, not three.
Source: SARS, CSARS v Africa Cash and Carry (Crown Mines) (Pty) Ltd and Another, 42076/2022, 2 October 2026