Gauteng businessman Hamilton Ndlovu showing off his five luxury cars bought in one day. Twitter@GuyTaylor10
It was during the height of hard lockdown in May last year and coincided with companies he owns or has links to being awarded contracts to supply goods to the National Health Laboratory (NHLS).
While these and other contracts were already under investigation by the Hawks, the social media post grabbed the attention of the taxman which seized some of his assets, including the freezing of bank accounts and the removal of vehicles.
Ndlovu fought back, but in a recent judgment handed down by Acting Deputy Judge President Roland Sutherland in the Pretoria High Court, the provisional order granted in September last year was made final.
And Ndlovu was ordered to pay the legal costs of the South African Revenue Services (Sars).
Judge Sutherland, in explaining the background, said: “Ndlovu is solely responsible for Sars taking an interest in his affairs.
“He thrust himself out of obscurity by doing two things. First he bought five luxury vehicles at about the same time as he and the other respondents received payment for lucrative contracts with the NHLS.
“Then he bragged about it on social media.
“Apparently there are people at Sars who trouble to follow social media. They looked at his tax affairs and were impressed that Ndlvou had spared Sars the burden of reading any tax returns since 2016.
“They referred the big spender to the Illicit Economy Unit who have a keen interest in mismatched income and expenditure phenomena. They delved into his affairs and observed flows of money to and from one or other of the respondents and to elsewhere which did not ostensibly have a rational business purpose.”
Judge Sutherland said tax and VAT affairs were also not in order.
Some of the companies had also declared themselves to be dormant yet were trading.
A closer look at the NHLS contract revealed that four entities connected to Ndlovu had received almost R40 million over two months: What was not visible was any money paid to produce or acquire the goods required for the contract.
Much of the money was paid over to Ndlovu or to trusts and entities controlled by him.
Sars calculated that the tax liability ran into about R78 million, some of which was not owing and only due this year.
But, Judge Sutherland said, what was, or what was not owed, was not important in the matter before him. What was important was whether or not when Sars got the initial order, if it had made material non-disclosures.
Ndlovu’s lawyers argued that at that time he was putting his tax affairs in order and PAYE payments had been made.
The judge said: “Against the panoply of tax irregularities, factual oddities and absence of apparent commercial rationale, these details are peripheral.”
He ruled that Sars had reasonable grounds to believe that there was a real risk of assets being dissipated which would frustrate its attempts to collect what was due.
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