Regiments Capital claimed more than R600-million in professional fees as taxable deductions — a large chunk of payments it had made to several letterbox companies.This is according to a tax audit carried out by the South African Revenue Service into the company’s affairs for the period 2014 to 2016. Audits for 2017 to 2019 are still under way.
Owners Litha Nyhonyha and Niven Pillay desperately wanted to enforce an earlier court order that had set aside the company’s liquidation — that order handed down on 22 February 2021 is the subject of a Supreme Court appeal by SARS. Out of this total, an amount of R69-million was assigned to “unknown” recipients whom SARS says it has reason to believe were also letterbox companies.
Said Boshoff: “Such unlawful conduct is not a necessary concomitance of the trading operation of providing financial services nor were the expenses incurred bona fide for the rendering of services or for the purposes of carrying on a trading operation.” Alternatively, SARS says the expenses constitute activities contemplated in Chapter 2 of the Prevention and Combating of Corrupt Activities Act — which provides for the criminalisation of gratification paid to promote, execute or procure any contract with a public entity or other organisation or institute.