Here’s a rule to remember: If you concede the foundation, you lose the building.

A recent Supreme Court of Appeal judgment is a masterclass in what happens when strategy fails before substance is even tested. It is dressed as a tax case. It is actually a governance case.

In Ntayiya v SARS (December 2025), an attorney filed nil tax returns for six consecutive years. SARS audited him. Bank statements told a different story. An assessment of roughly R3.6 million followed, including interest and a 150% understatement penalty for intentional tax evasion.

He objected. He appealed. He litigated. He engaged in alternative dispute resolution. He returned to court.

And he lost, not because tax law is unforgiving, not because process is.

Delegation Is Not Abdication

The taxpayer’s explanation was familiar: the nil returns were submitted based on incorrect calculations prepared by his accountants. It was, he argued, a bona fide error.

The court was not persuaded.

Submitting a nil return when income exists constitutes an “understatement” under the Tax Administration Act. A 150% penalty applies in cases of intentional tax evasion unless the taxpayer proves a bona fide inadvertent error.

Blaming accountants without corroboration was not enough. For business owners, the principle is straightforward: If your name is on the return, responsibility is yours.

Outsourcing accounting does not outsource accountability. Directors remain responsible for what is filed in their name.

Data Defeats Narrative

The taxpayer argued that he ran a small law practice and could not have generated the income SARS claimed.

SARS did not argue the theory. It analysed bank statements.

The audit revealed deposits inconsistent with nil returns. It also revealed the purchase of multiple vehicles during the same period in which no income was declared.

In today’s environment, SARS audits from data, not from stories.

Business owners who think modest operations escape scrutiny underestimate the digital footprint of modern commerce. Bank statements, asset purchases and lifestyle indicators tell a coherent story. And that story will be tested against tax filings.

When the data contradicts the return, the data wins.

The Fatal Strategic Error

The most important lesson in this case, however, is procedural.

In the High Court, the taxpayer amended his notice of motion. Originally, he sought to review and set aside the tax assessments and have corrected financial statements accepted. But at the hearing, he abandoned those claims and pursued only a repayment claim.

This was fatal.

The court held that once the validity of the assessments was no longer under attack, the assessments stood as final and binding. And because the 150% penalty flowed from those assessments, it could not be attacked in isolation.

In simple terms: He tried to argue about the consequences without challenging the foundation.

That is not just a litigation lesson. It is a governance lesson.

In business disputes, regulatory matters, and even internal conflicts, you must identify the foundational decision. If you concede the base structure, everything built on it stands.

You cannot abandon the foundation and then complain about the roof.

ADR Is Not a Reset Button

The taxpayer also engaged in alternative dispute resolution with SARS. Revised financial statements were submitted. There were discussions. There were exchanges.

But there was no formal withdrawal of the original assessments. No settlement agreement approved. No binding compromise.

The court made it clear: unless formally set aside or withdrawn, an assessment remains valid and enforceable.

Many business people assume that ongoing engagement or negotiation suspends risk. It does not.

Dialogue is not a concession until something is formally varied; it stands.

Separate Means Separate

Another interesting feature was the attachment of funds from the law firm’s bank account to secure the personal tax debt. On appeal, the taxpayer sought to introduce new evidence relating to that attachment.

The court dismissed it.

A company is a separate legal persona. If the company wishes to challenge an attachment, it must do so in its own name. It was not a party to these proceedings.

This is a reminder many owner-managed businesses forget: the company is not you. And you are not the company.

That separation can protect you. But it can also constrain you.

Documentation Is Everything

The dispute also involved the private use of motor vehicles. The taxpayer claimed 100% business use. SARS requested supporting documentation - logbooks and mileage records.

None were produced.

Ultimately, SARS accepted a 90/10 split proposed by the taxpayer’s own accountants.

No records mean no deduction.

This is not merely a tax principle. It is a management principle. If a claim matters, document it. If it cannot be evidenced, it does not exist.

The Bigger Lesson

This case is not about aggressive tax planning. It is not about complex structuring. It is not about obscure statutory interpretation.

It is about discipline:

•           File accurate returns.

•           Supervise professional advisers.

•           Keep records.

•           Understand corporate separateness.

•           Attack foundational decisions if you intend to challenge consequences.

•           Do not assume engagement equals resolution.

Most importantly: think strategically.

Litigation, like business, requires clarity about what you are trying to undo. Concede the wrong issue, and the rest collapses.

The appeal was dismissed. Costs were awarded, including the costs of two counsel.

Expensive, and entirely avoidable.