To answer this question, we have to go to the Tax Administration Act.

Here’s a summary of what it says:

s155 The representative taxpayer is personally liable if he/she disposes of money that came into their possession after the tax was payable and could have been used to pay the taxes.

s180 Any person who controls the management of a company is liable if negligent or fraudulent in respect of the company’s tax debts.

s181 The shareholders of a private company are liable if, on the winding up of the company, they received assets that could have been utilised to satisfy the company’s tax liabilities.

These are the main ones but there are other, less likely, situations in which a person can be held liable.

So, how does this affect you if you have a company that never traded and has been hit with Administrative Penalties for non-submission of tax returns?

It seems that you can only get caught by s180. Would SARS follow through on that one? I personally doubt that they could get away with it, because the negligence was not in respect of the company’s tax debts as it had none. You could not be held negligent for subsequently not paying an Administrative Penalty from a company that had no money.

However, I must stress that I am not a tax specialist and that the above are simply my views on the matter.