Hangwani Morgan Maumela is facing a staggering R1.9-billion tax bill from the South African Revenue Service, but he and members of his family are fighting back in the Gauteng High Court in Pretoria.
Maumela, his mother Mboneni Maumela and his sister Rumani Maumela are challenging the assessment in their capacities as trustees of the MHR Family Trust. The trust is at the centre of the dispute, with SARS claiming that large deductions listed in its tax returns could not be properly supported.
The court battle began with arguments over whether the High Court has the power to hear the matter or whether the dispute should instead be dealt with by the Tax Court. Judgment on that question was reserved after the first part of the application was heard on Thursday.
The merits of the massive tax bill have not yet been decided. The court has also not ruled on whether SARS acted lawfully when it issued the assessment or whether the trust’s challenge will succeed.
The application has been brought in two parts. The first asks the High Court to allow the case to proceed there. The second seeks an order setting aside the assessments and SARS’s decision to issue them.
The Maumela family has also lodged contempt proceedings against SARS. They argue that the revenue service breached an order granted in August 2024, which set out how the parties were supposed to work through the audit and possible settlement process.
The dispute stretches back to 2022, when SARS flagged the tax returns of the MHR Family Trust for verification. In December 2023, the revenue service obtained a preservation order against the trust and a curator was appointed.
That preservation order was discharged eight months later, on 2 August 2024, in an agreement between Maumela and SARS. The order required the trust to cooperate with the audit process under the Tax Administration Act. The audit was meant to be completed within 60 days, followed by another 60-day settlement period during which the parties could engage and try to resolve the matter.
The order also prevented major assets from being disposed of during that period. The curator was allowed to remain in place in an oversight role.
However, SARS issued its assessment shortly afterwards. The revenue service had already sent Maumela a notification of audit in May 2024. In early July, it issued a letter of findings warning that most of the deductions claimed by the trust were likely to be rejected.
The letter stated that R1 173 999 930 of the R1 174 049 818 claimed as deductions was likely to be disallowed. SARS said the payments included large round amounts paid to unidentified beneficiaries and companies linked to Maumela, including Galloping Limpopo and More Concerts.
The revenue service also identified payments for luxury vehicles and properties in wealthy areas of the Western Cape, Gauteng and Durban.
“SARS found no evidence to indicate that these payments were incurred in the production of the taxpayer’s income and therefore qualified for a deduction in terms of the relevant provisions of the Income Tax Act.”
SARS said payments described as salaries were also found in the bank statements. However, the trust was not registered for employee tax and the recipients could not be identified. The revenue service said there was also no proof that the alleged salaries were connected to the production of income.
Only R49 887.19 in bank charges could be confirmed, according to the court papers.
On 13 August 2024, just 11 days after the agreed order, SARS issued a letter of assessment. It said adjustments had been made to the trust’s 2018 to 2022 tax returns because expenses had been overstated.
The total amount claimed was R1 929 830 817, including normal tax, penalties and interest. A letter of demand was sent two days later.
SARS described the trust’s conduct as “intentional tax evasion” and “obstructive”. The revenue service said the trustees had failed to provide records requested during the audit.
Maumela disputes that version of events. He said the trust’s attorneys and accountant met SARS officials in May 2024 for settlement discussions. According to his court papers, they explained that the annual financial statements previously submitted for the disputed tax periods had not been properly prepared, submitted or finalised, through no fault of the trust.
He said a new accountant had been appointed and had found that certain expenditure and income items had not been correctly recorded. Maumela argued that correcting those errors would reduce the tax liabilities of the entities involved.
He further said the trust had shared information about intercompany loans and was preparing a loan matrix to explain how funds had moved between the trust and related entities.
Maumela said the corrected financial statements were eventually submitted to SARS. However, he claims the revenue service did not properly consider them and failed to carry out a proper audit.
SARS has rejected that claim. Sandy Tsumaki, a senior manager in the revenue service’s syndicated tax and customs crime division, said attempts to engage with the trustees had not succeeded. He said SARS had received only a handful of documents and that the trust had not provided the required information during the audit.
Tsumaki said SARS could not accept the alleged loans because no loan agreements or ledgers had been supplied. He also said the statements were unsigned and had been prepared on a going-concern basis even though the taxpayer had been technically insolvent since its inception.
“The taxpayer has had no capacity to repay the amounts received as it has no source of income declared to SARS except for minimal interest on investments,” Tsumaki said.
He said the trust had claimed about R1 billion in loans against income of approximately R13 million.
The tax dispute forms part of wider scrutiny surrounding Maumela’s financial affairs and business dealings. He has been linked to an alleged extraction network at Tembisa Hospital involving Gauteng health department officials. The State alleges that entities linked to him received at least R800 million through contracts awarded by the hospital as part of a fraud, money laundering and racketeering case.
The Asset Forfeiture Unit has also frozen luxury vehicles, homes and a party boat linked to him, with the combined value estimated at R325 million. The action followed an examination of hospital payment records, supplier information and company records.
The case is also linked to the late Gauteng health department chief accountant Babita Deokaran, who raised concerns about potentially fraudulent transactions at Tembisa Hospital before she was assassinated in August 2021.
In the weeks before her death, Deokaran reported transactions worth about R850 million and stopped more than R100 million from being paid in a monthly payment run. About R35 million of that amount was allegedly due to companies linked to Maumela.
The criminal and civil matters remain separate from the tax challenge now before court. For the moment, the immediate issue is whether the High Court will hear Maumela’s application or send the dispute to the Tax Court.
With almost R2 billion hanging over the MHR Family Trust, the jurisdiction ruling will determine the next step in one of the country’s biggest tax battles. The court has reserved judgment, leaving SARS and the Maumela family waiting for clarity before the fight over the assessment can move to its central question: whether the enormous bill should stand.
