Monday, February 14, 2011

King firm withdraws appeal, faces R2.3bn tax

King firm withdraws appeal, faces R2.3bn tax
February 2011 | By JANA MARAIS


Ben Nevis, an offshore entity owned by an offshore trust of Dave King, has withdrawn its intention to appeal against a Tax Court judgment and will have to cough up R2.3-billion in unpaid taxes, interest and penalties.

Share59 King, one of SA's most controversial and richest businessmen, and the SA Revenue Service (SARS) have had a marathon legal battle over unpaid taxes.

The amount owed includes 200% penalties and springs from tax assessments for 1998, 1999 and 2000, according to papers in the North Gauteng High Court.

According to the judgment, most of the profits were from the sale of King's shares in Specialised Outsourcing, a company founded by King. It saw phenomenal increases in its share price. But the price tanked when it came to light King had sold his shares. Directors were not obliged to disclose transactions then.

If SARS manages to raise the money from King's entities, it would be significantly more than the R636-million the parties proposed to settle on in 2009.

SARS would not comment on how or whether it would proceed to recover the amount owed by Ben Nevis. It is unclear if sufficient assets remain to cover the tax bill.

King, who rejoined JSE-listed MicroMega, a company he founded and in which he holds a significant stake, as chairman in January, told Business Times at the time that he is "not involved at all" with Ben Nevis, which is managed by trustees.

The Tax Court judgment, however, found otherwise.

"Although he was not an officer of the appellant and he held no other formal position which would normally entitle him to act on its behalf, he clearly controlled the appellant as if he was its managing director and was acting with all the powers of the board," read the judgment which also states that King is "a glib and shameless liar".

The judgment was filed as part of an application brought by SARS to attach cash of held by Metlika, another offshore King-related entity.

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