EP08: Think It’s Closed? Why SARS Might Still Be Coming for Your Dormant Company

Too many entrepreneurs think that if a company stops trading, it quietly disappears. But SARS has other plans—and the penalties for inaction can be brutal. In this episode, BizRev’s resident attorney Nicole Lin joins Francois to unpack the real process of legally closing a company in South Africa.

From misunderstood SARS requirements to overlooked CIPC compliance, this conversation reveals the costly myths keeping dormant companies in limbo. Nicole breaks down the exact steps founders need to take to close a company cleanly without getting buried in red tape, debt, or delay.

If you’ve ever thought, “But I haven’t traded in years…”, this one’s for you.

KEY TAKEAWAYS

1. Dormant doesn’t mean invisible - SARS still expects tax returns—even if your business isn’t trading. Neglecting this can lead to tens of thousands in admin penalties.
2. Deregistration is a multi-step process - You must be compliant with both CIPC and SARS. If either system is out of sync, deregistration is blocked.
3. You’re not off the hook—even if CIPC says ‘deregistered’ - Final AR status on CIPC can’t complete the process unless reactivated and brought to compliance—which often adds months to the timeline.

👉 Visit www.bizrev.co.za to learn more about our coaching, consulting, and full-service business support solutions.

📊 Want to see where your business really stands today? Take our free Biz Clarity Score™ — a 3-minute diagnostic to uncover gaps in financial visibility, tax strategy, advisory support, and business resilience. Get instant feedback and actionable next steps.

[Take Clarity Score Quiz Here]

💼 Have a business challenge, need strategic mentorship, or want to be featured on an upcoming episode of The Rev Room? Reach out directly via our site—we’d love to hear from you.

Let’s build better, together.

Transcript

hi there
and welcome to the Rev Room powered by Bizrev Advisory
I'm Francois
CEO of bizrev and it's great to have you with us
this channel is where we unpack real life stories
behind business growth
from strategy and finance to compliance
people and purpose
whether you're a startup founder
a seasoned business owner
or just curious
about how to build something that lasts
The Rev Room is where development meets insight
we'll be sharing practical advice behind the scenes
real life stories
interviews with bold entrepreneurs
and tools to help you grow smarter
and maybe even sleep better at night
knowing your business is on the right track
don't forget to like
subscribe and drop your thoughts in the comments
this room works best when it's a conversation
let's get into it
welcome everyone today we're sitting with Nicole
our in house attorney
and we're gonna talk about how to close my company
so welcome Nicole thanks for having me again friends
so Nicole let's start with the basics
why are we suddenly seeing so many clients
asking us to help close their companies
well
a person can have many reasons for closing a company
but the ones that we've seen most recently are that
they start a company many years ago
and they actually never get round to using them
so the fact is
is that they forget that they actually have a company
and just don't ever use it
other reasons are actually that unfortunately
when they started the business
the business didn't actually survive
the economic downfall or fallout of Covid
that it had on many many companies and businesses
or it just didn't reach the potential
that the person initially had
for the company in itself
the fact is is that
the real reason behind a closure of a company
is not really relevant
it is very relevant to the person themselves
but for now for today's podcast
the focus is actually on the pressure
that is coming from SARS and
the reason behind that is
because SAZ is pursuing unpaid taxes
penalties and admin fees for all companies
including dormant or non trading companies
right and so many people believe if I don't trade
I don't have to do anything
but source doesn't seem to work that way
do they not at all
as you and I both know
even if the company isn't trading or a dormant company
source still expects returns to be submitted
and if they're not
the company incurs monthly penalties
and it's I I repeat
monthly penalties we've seen dormant companies
owing tens of thousands of rands
just in admin fees alone
this puts even more pressure
on any type of process to do with the company
including the deregistration one
since the process in itself is already a lengthy one
not having your return submitted enough to date
causes an even larger delay in the processes
and causes more stress on the person themselves
okay Nicole
so let's walk through the process
what's the first thing a business owner needs to do
if they want to close their company
so the first step is to check the business status
on the CIPC
the CIPC is your first port of call
for most things to do with a business
or a company
you'll be able to see if the company
has one of a various status
but the ones that are relevant for now is in business
voluntary deregistration or arderegistration
if the company is still running
the status will say in business
which is logical
where the complication comes in
especially for companies that are dormant
or not trading
is if the company has already been deregistered
due to non compliance for payment of annual returns
if annual returns are not paid
and filed within a period of 2 years
then the company then gets put into AR
final de registration
this type of deregistration causes
a whole lot of hassle as you know
specifically when going to
into the process of deregistering the company
with SARS alright
so if Crpc says the company is deregistered
what does doesn't that mean if you're off the hook
it it doesn't mean you're off the hook at all
considering the status of the company
if it reflects as let's say voluntary deregistration
you still have to deregister the company with SARS
it's not just C I P C and you're done
you have to still go the extra
mile and and deregister the company with SAZ itself
however if the status shows AR final deregistration
the matter becomes a lot more complicated
because SARS won't let you deregister
unless you're compliant
on both the CIPC system and on the SARS system
it indicates
that you're not actually compliant with CIPC
and you can't fix compliance
unless the company is reactivated
so we first submit a reactivation request to CIPC
which unfortunately is not always a sure success
considering that the reactivation application
can be denied by CIPC
and once that's done well
assuming we're dealing with the CIPC compliant company
step
2 is appointing or updating the tax representative
with SARS
honestly this step is more of a
should have been done when the company was registered
step however
again as we've both seen
we have realised
that even though a company is open and registered
and is trading with C I P C
the step of registering the tax
representative of the company
seems to be forgotten quite often
therefore again
this causes a delay in any kind of process
when it comes to the company
especially the deregistration process
if there's no representative listed
or the person is no longer involved
you can't access the company's tax profile
or file their returns this is a legal requirement
and one of the biggest blockers
that we actually deal with
so Nicole you're telling me that without a valid rep
nothing moves forward absolutely that that is a
fact you and I both know
the amount of clients we've had who come in
and ask
why the process is actually taking so long to de
register a company
only for us to actually have to explain to them that
before anything can be done
the tax representative has to be appointed
and accepted by SARS
the source system has to then be updated
and access to the tax profile has to be finalised
only once this is sorted can we move on to step three
which is submitting all outstanding returns
that includes income tax VAT
P a y E and provisional tax
even if there was no trading
and the company was dormant
we still need to
to file zero returns to bring the account up to date
so only once the company is active
has a tax rep and is fully compliant
can we even talk about closing it
that is absolutely correct
so basically this means that your de registration
application is stuck
if you haven't done what we just talked about
so let's say at this point
you have a tax rep and you are C I P
C and sales compliant
you can apply for remission of penalties and interest
you can actually begin the C I P
C deregistration process and if necessary
settle or arrange payment for outstanding amounts
so let's be honest this is where most people panic
what happens
if the company has years of penalties piling up it's
actually a very common occurrence
but SARS applies recurring
monthly admin penalties for every late return
that can go back even a many
many years actually
so even a company that hasn't traded can owe thousands
so
can someone still close their company if they owe SARS
again it kinda depends on
if the company is also compliant with CIPC
but there are a few factors to consider
if we've submitted everything
and there's no active tax debt
or if there's a payment plan
or a successful remission application
then yes we can move forward with closure
but if nothing's been filed
SAZ can and will block de registration
alright so
let's talk about the biggest mistakes
we see people make
well the first one that comes to mind is that
as we previously said a person
assumes that just because the company is not trading
they no longer have to stay compliant with CIPC or SARS
that is simply not true
you're still required to submit returns to CIPC
and SARS until the company is legally closed
alright so what about trying to deregister with no tax
rep or outstanding returns
well that's the other major error that people have
people go straight to C I P
C to d register
thinking it's just a quick one step process
but without SA's compliance
C I P
C will be the one that bounces the application back
and without C I P C compliance
SA's will bounce the application as
well and this is the
this is actually the problem
that a lot of people don't understand C
I P C and SARS are very connected therefore
if the company is not compliant with one
you basically
aren't able to do anything with the other
this is especially seen to be
because when you deregister a company with CIPC
one of the required documents
is a letter of good standing
from SARS without a tax rep
our access to the profile
and up to date submission of outstanding returns
you cannot get this letter from SARS
and cannot complete your d
registration application to CIPC
alright so what if SARS is up to date
but the CIPC annual returns have not been filed
annually
and the company is now in AR final d registration
what
what many people don't seem to understand is that yes
you may be deregistered on the CIPC system
when you have a status of AR final deregistration
so when a people when a lot of people see
the status as AR final deregistration
they think cool the company's done it's finished
it's closed which honestly would be great however
the issue comes when SAZ comes knocking
saying that the company
has not been deregistered with them
which people always seem to forget to do
a company has to be de registered on the CIPC system
and Saas
when a company is de registered voluntarily
the process is a lot more straightforward and simple
because a voluntary deregistration
can only be done when the company is up to date
and compliant with the company
C I P C annual returns and SARS tax returns
I don't think I can state this more simply than this
please
keep your annual returns and tax returns up to date
paid and filed
SARS will not let you de register your company
on their system if the C I P
C status shows AR final de registration
full stop
SARS does not accept this form of de registration
as it shows that the company was not compliant with
with the CIPC when it when the CIPC de registered it
SARS won't you let won't let you de register
unless you're compliant with both systems
and this is where the huge problem actually comes in
as AR final deregistration cannot be dealt with
just by complying with the annual return submissions
by basically
going to CIPC and paying the ones that are outstanding
the company has to be reactivated
or reinstated with the CIPC system
and declared active by the CIPC
so it's basically one step forward and five steps back
with an AR final deregistration
because we first have to submit
a reactivation request to CIPC
which in itself can cause a huge delay
and beyond that
the CIPC can actually deny the application
because it's actually supposed to be used by companies
that are still trading or still have assets
wow Nicole it's a lot to think about can
you share an example of a case study that we handled
recently
the first one that comes to mind is
we actually had a client who hadn't traded in since
around 2,018
I had nearly 50,000 rand in penalties
I mean how's that for an amount wow
we reactivated the company
appointed a new tax representative
filed all outstanding returns
and then successfully applied for penalty remission
SARS approved it and within a few weeks
we processed the full deregistration
wow Nicole
so it's absolutely possible
but only if you follow the process correctly
exactly
the the problem is that
there's a lot of delay and confusion
when it comes to the cost
and any kind of money transactions
but with the right help it can get sorted
excellent so
let's wrap up with some key steps for anyone listening
step 1
check your Crpc status and reactivate if necessary
step 2
appoint or update a tax representative with stars
step 3 submit all outstanding tax returns
even null ones if need be
step 4
handle penalties through the remission or payment
and step 5
deregister with CIPC and SARS when fully compliant
exactly and you know
I know the sound many other things that we talked about
may seem complicated
but with good help and expert advice
no one has to do it alone
excellent thank you for your time Nicole
and also your valuable input
thank you for having me
thanks for tuning into the Rev room where
growth meets execution
if you got value today
follow share and subscribe
for more insight and support
head to WWW dot buzzrev dot co dot za
if you're ready to grow as a leader
scale your business and get compliant
reach out
let's build something that lasts