Ponzi Scheme Fallout: Court Says SARS Can Still Tax Defunct Companies
This article will count 0.25 units (15 minutes) of unverifiable CPD. Remember to log these units under your membership profile.
Prinsloo and Others v CSARS and Another (020214/2023) [2025] ZAGPJHC (29 August 2025)
Even collapsed Ponzi scheme companies can’t escape the taxman.
The Pretoria High Court dismissed an attempt by liquidators of a failed investment scheme to cancel SARS’s tax assessments worth millions against two companies that had defrauded investors.
The Background: A Classic Ponzi Scheme
The case centers on a fraudulent investment scheme operated by father and son duo, Johan and Riaan Smit, using three companies, Johan A Smit and Associates (JASA), QSG Consult International (QSG-I) and Rialis Consultants. These companies took in massive amounts of investor money and promised unrealistic returns. Funds were sent offshore to Dubai and then brought back in lump sums with no real business activities in between.
Eventually, the scheme collapsed. The Smits fled the country, and the companies were liquidated. In 2019, the High Court ruled that the companies were essentially one operation and should be treated as a single entity for liquidation, called the QSG Investment Scheme.
The Legal Dispute: Can SARS Still Tax the Old Companies?
In 2021, SARS issued tax assessments for the years 2013–2018 against JASA and QSG-I. The liquidators argued:
The 2019 court order made the companies part of a single scheme.
The companies no longer existed legally.
SARS couldn’t issue tax bills against companies that had been “merged” into a new entity.
They went to court to have those tax bills cancelled.
The Court’s Decision: You Still Owe, Even If You’ve Collapsed
The High Court rejected the liquidators’ argument and ruled in favour of SARS. Judge van der Schyff held that:
The 2019 order did not erase the original companies’ legal existence.
SARS was within its rights to issue and enforce tax assessments against JASA and QSG-I.
The companies still owed SARS for past income — and that debt could be claimed from the assets pooled in the QSG Scheme.
The court dismissed the application and ordered the liquidators to pay legal costs.
Lessons Learned
Merging companies doesn’t erase their past tax obligations. Even if entities are grouped for liquidation, their separate tax histories remain intact.
Just because a company is “treated as one” for liquidation doesn’t mean its legal personality is wiped out.
SARS isn’t powerless after liquidation. It can — and will — issue tax assessments for prior years, even after companies collapse.
Liquidators must tread carefully. Misinterpreting a court order could lead to failed litigation — and a hefty legal bill.
📣 For CIBA tax practitioners, this case is a strong reminder: group liquidations don’t override the legal and tax identity of each company involved. SARS will follow the paper trail, and courts will back them.
