A letter of demand from the taxman is like a financial fire alarm to jolt you into action to prevent the heat from turning into flames. But don’t expect any shrill sirens or flashing lights to alert you to the fact that you owe taxes. The SA Revenue Service (Sars) typically uploads the letter of demand on your eFiling profile and – provided you have updated your contact details – also sends an email or SMS notification. “Unfortunately, many taxpayers only realise they've received this when their bank account is already frozen or their salary garnished,” says Razael Manikus, COO at Latita Africa. “At that stage, it’s very serious but you can still solve the problem by acting immediately.”

What is a letter of demand?

It’s a formal notice issued when Sars believes you owe tax. Often this debt is due to incorrect IRP5s or third-party data mismatches; unclaimed deductions not reflected correctly (such as medical aid or retirement contributions); undisclosed investment or rental income; penalties on late submissions or underpayments from previous years; or reversed refunds after a Sars audit.

Sars often sends reminders before the official Final Letter of Demand, but these reminders are courtesy communications, not legally required steps. Sars can send SMSes, emails, or eFiling notifications reminding you of outstanding balances. These are not legal letters and don’t trigger the 10-business day enforcement countdown. The purpose is to give taxpayers a chance to settle before formal debt collection begins.  The final (and only) letter of demand is the first legal step in Sars debt collection. This is issued via eFiling, email, or physical post to your registered address. This starts the 10-business day period before Sars can take enforcement action (e.g., bank account debit, salary garnishing, property attachment etc).

What happens if you ignore it? 

Sars can, without further warning, deduct money from your income via garnishee orders to your employer or clients. The Revenue Service can also attach your bank funds, withhold tax clearances and refunds, and get a court judgment that will blemish your credit record. In cases of repeat non-compliance, Sars can even refer you to the National Prosecuting Authority.

Assess your situation 

Log into your Sars eFiling profile to check the date when the letter of demand was issued (under ‘Correspondence’). That’s the start of your 10-business-day response window. Review your statement of account to identify the source of your debt and the tax period involved. If the amount is correct and you’re able to pay, do this immediately. Use the payment reference number on the letter to pay Sars.

Pause the problem

Apply for a suspension of payment, if you can’t pay or need breathing space before disputing the amount. This legal mechanism doesn’t cancel the debt but pauses Sars’s ability to collect. You can apply for a suspension of payment via eFiling or your tax representative. Attach a statement of financial hardship and your latest bank statements, or a note explaining your intention to dispute. 

Make a plan 

If you accept your debt but can’t pay in full, Sars may agree to a deferred payment plan with instalments. Or you could negotiate a compromise of tax debt, where Sars reduces your debt if the full payment would cause you financial hardship. 

Dispute, if needed

If you believe the assessment is wrong, lodge a formal notice of objection on eFiling. You have 30 business days from the original assessment. Clearly explain the reason for your objection, and attach supporting documentation (such as invoices, proof of payments, or bank statements).

“Sars aren’t trying to trick you,” says Manikus. “They only want what’s legally owed to them.” It’s crucial to follow the correct procedures and timelines when receiving a letter of demand. Don’t assume the problem will resolve itself, instead speak to a qualified tax expert immediately, she says. Timing is everything.

Written by Latita Africa