On 23 August 2021, the Cape High Court handed down judgement in the case of PERI Formwork Scaffolding Engineering v CSARS. The case concerned the applicability of a 10% penalty (amounting to R1.6 million) and interest thereon in respect of the late payment of employees’ tax by the taxpayer.

The facts of the case are as follows:

• Employer reconciliation was due on 31 December 2017 and was filed on 18 December 2017. An amount of R10.6 million PAYE was due by the taxpayer in terms of this return.
• On the date of filing (18 December 2017), the taxpayer instructed Nedbank to make payment of the PAYE liability on 3 Jan 2018.
• The office of the taxpayer was closed from 15 December 2017 to 3 January 2018.
• On 3 January 2018, the payment administrator was unable to make payment of the PAYE as insufficient cash was available, rather full payment was made and received by SARS on Monday, 8 January 2018.
• The reason provided by the taxpayer for the payment on 8 January 2018 was that it was waiting for the payment of debtors and in line with its usual practice and projections it was understood that there would be sufficient cash available on 3 January 2018. When it became apparent on 3 January 2018 that sufficient cash was not available, the taxpayer requested a R5m overdraft from Nedbank which was approved on 5 January 2018. There remained a shortfall of R100k – which the taxpayer had expected would be paid by outstanding debtors on 5 January 2018, but this amount was not received in time.
• On 6 January there was a shortfall of R6,000, as a result of which the payment to SARS did not go through.
• The payment administrator then requested payment from other group entities of R20k on Monday, 8 January, after which payment of the PAYE liability could be made.

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