Tax fraud: Company, director convicted after R993k refund scam

A company and its director have been convicted after fraudulent value-added tax (VAT) returns led the South African Revenue Service (Sars) to pay out an illicit refund of nearly R1 million, exposing a tax fraud scheme that triggered a criminal investigation.

The Specialised Commercial Crime Court (SCCC) heard the matter, in which Hanson Distribution CC and its director, Hanson Ntjangase, faced 10 fraud charges.

Ntjangase was also charged with contravening the Prevention of Organised Crime Act (Poca).

Fraud case

The fraud case involved submitting fraudulent VAT returns, resulting in an illicit refund of R993 330.

According to the National Prosecuting Authority (NPA), the court sentenced Hanson Distribution CC to a fine of R500 000, wholly suspended for five years, on condition that the company is not convicted of fraud during the suspension period.

The court sentenced Ntjangase to a fine of R500 000 or five years’ imprisonment, wholly suspended for five years, on the same condition. On the POCA charge, the court sentenced him to a fine of R50 000 or one year’s imprisonment.

Vat fraud

The court heard that the company was registered for VAT and that Ntjangase owed Sars approximately R180 000.

NPA spokesperson Magaboke Mohlatlole said that while seeking assistance with his financial difficulties, Ntjangase was introduced to two women who allegedly promised to help him raise funds. He later gave them the company’s login credentials and access to its Sars tax profile.

“Fraudulent VAT 201 returns were subsequently submitted, resulting in R993 330 being deposited into Ntjangase’s bank account. Acting on instructions, he transferred funds to various bank accounts, with the transfers exceeding R700 000.”

Tax profile

Mohlatlole said Ntjangase later changed his bookkeeper and regained access to the company’s tax profile.

“He subsequently discovered that two additional VAT refunds were due to the company. Upon realising that the refunds were fraudulent, he reported the matter to Sars and requested that the payments be stopped and cancelled.

“The fraudulent refunds were subsequently cancelled, and the matter was referred for investigation,” Mohlatlole said.

Guilty

Ntjangase pleaded guilty and cooperated with Sars and the state.

He also repaid the amounts he personally benefited from. His cooperation includes an undertaking to testify against the remaining suspects, which is expected to help the state prosecute other individuals allegedly involved in the scheme.

The NPA said it remains committed to tackling fraud and financial crimes that undermine South Africa’s tax system and reduce funds needed for essential public services.

It also credited the Honeybadger team with investigating financial crimes and reaffirmed its commitment to working with Sars, law enforcement agencies, and other stakeholders to hold those involved in fraudulent schemes accountable.