In a case recently before the High Court, the purchaser of a nightclub business sought to escape payment to the seller by alleging that the purchase price had been split between two separate contracts in order to reduce the seller’s Capital Gains Tax liability.  The Court confirmed that any transaction “one of the objectives of which was to perpetrate a fraud upon the revenue” is invalidated by statute. 

Despite the seller’s denial of any attempt at tax evasion, the Court also referred the papers to the Commissioner of SARS “for his consideration and any further action he may deem appropriate” – presumably not a happy prospect for the parties in light of the severe monetary and criminal penalties attaching to tax fraud.