Millar J[1] starts with a line that should not need to be said out loud: “one of the two certainties of life – tax.” (para 1).
He then adds the obvious next step: if a taxpayer has “rendered unto Caesar that which is Caesar’s,” you would expect Caesar to do the same (para 2).
In Inhlakanipho Consultants (Pty) Ltd v CSARS[2], that is precisely what did not happen.
The taxpayer settled a VAT dispute. SARS issued revised assessments. The taxpayer paid what was agreed.
And SARS still treated the liability as not discharged.
A short history
SARS raised VAT assessments for the periods 04/2010 and 02/2014. The taxpayer objected. The objections were partly allowed. The balance went to the Tax Court, and the dispute was referred to ADR.
ADR produced a written settlement agreement in September 2018. After the dust settled on the numbers, the taxpayer accepted a total liability for the revised amounts in dispute of R5,910,972.60 (plus revised understatement penalties).
The agreement recorded, in black and white: “This Agreement represents the final agreed position between the Parties and includes all the issues in Dispute.” (para 10).
SARS would issue altered assessments to give effect to the settlement, and the taxpayer would pay within 21 days after those altered assessments were issued.
So far, nothing controversial. The controversy starts after the taxpayer pays.
The taxpayer’s case
The taxpayer’s position was simple: once the taxpayer paid the capital sum agreed to in the settlement agreement, the capital sum was settled. Full stop.
The settlement did not (and could not) magically erase late-payment interest that had already accrued before payment. Nobody sensible was arguing that, at least not on my reading of the judgment.
SARS’ response
Despite what the court called the “clear and unequivocal” terms of the settlement, SARS “inexplicably” took the view that payment of the agreed amount did not discharge the liability for those periods (para 16).
Here is how SARS got there: it treated the payment as reducing a combined, running balance made up of the assessment, understatement penalties and interest that had been accruing on an ongoing basis.
On that approach, the payment clears interest and penalties first, leaving the capital untouched, so that “the principal debt with further interest was now still outstanding” (para 17).
That is the whole game. Keep capital alive on paper, and interest keeps ticking.
SARS anchored this on section 166 of the Tax Administration Act – the allocation provision that allows SARS to allocate a payment against penalty/interest or the oldest outstanding tax debt.
The Full Court: settlements are not decorative
The Full Court’s answer was, in essence: that is not how settlements with SARS are supposed to work.
A lawful settlement is meant to end a dispute. If SARS can take the money and then reinterpret the deal through an internal allocation lens that defeats the deal, settlement becomes pointless.
The court also had little time for the “plea ad miseracordium” that compliance would be inconvenient or would require system changes (para 31). A bare allegation that a system cannot do something is not evidence.
And then the court dealt with section 166 directly. SARS’ reliance on it here was described as “contrived and self-serving” (para 35).
By entering into the settlement in the terms that it did, SARS “eschewed its entitlement” to rely on section 166 for those specific periods (para 36).
The key insight
It might be easy to mistake the taxpayer’s case in this matter as being aimed at trying to avoid late payment interest all together. But that is not, on my reading, what the taxpayer was trying to achieve. This much is evident especially from the fact that one of the orders sought by the taxpayer (and granted by the court) was for SARS to render an account of the interest that is due and payable.
The taxpayer’s aim with this litigation, on my reading of the judgment, was simply to stop interest from continuing to accrue after the taxpayer had already paid the settled amount in full.
That distinction matters.
The takeaway
This is not an “open season” judgment. Settlements are drafted differently. Some expressly deal with interest. Some may expressly incorporate SARS’ allocation mechanics. The wording matters and the factual history matters.
But the judgment does suggest a specific and potentially important proposition: if a settlement is intended to be final for identified periods, the taxpayer pays the agreed revised amount, and SARS nevertheless uses allocation to keep capital alive and charge interest after payment, there may be grounds to fight about that “post-payment interest”.
The key question, it seems to me, is whether SARS “eschewed its entitlement” to rely on section 166 of the TAA when the settlement agreement is properly interpreted.
If you have settled a SARS dispute, paid what was agreed, and you are still seeing interest lines running after the payment date for the settled periods, it may be worth considering your options.
[1] In Inhlakanipho Consultants (Pty) Ltd v CSARS (A333/2024) (25 November 2025).
[2] (A333/2024) (25 November 2025).
