Wind Up Wind Down

f your company cannot pay SARS, the right solution depends on whether the problem is temporary or the business has become insolvent. Understand the options available before the debt becomes more difficult to resolve.

Understanding the tax implications during sequestration in South Africa is an important part of the insolvency process. Sequestration affects more than your assets and debts — it also changes how the South African Revenue Service (SARS) administers your tax affairs. This includes your tax status, outstanding tax debt, income tax and, in certain circumstances, Capital Gains Tax (CGT). Here is what you need to know.

A company experiencing financial difficulty does not automatically make its directors personally liable for its debts. However, personal surety, reckless trading, SARS debt and certain transactions can create personal exposure. Understanding when company debt can become a director’s personal responsibility is an important first step when a business is facing insolvency.