Is your tax practitioner registered?

JOHANNESBURG – The regulation of tax practitioners, due to start on July 1 this year, could see thousands of practitioners leave the system. This follows prolonged efforts to clean up an industry where every Tom, Dick and Harry could previously file returns and offer tax advice.

Following amendments to the Tax Administration Act last year, all tax practitioners will, apart from their registration with the South African Revenue Service (Sars), have to register with a statutory or voluntary “recognised controlling body.” Statutory bodies include certain Law Societies and the Independent Regulatory Board for Auditors (IRBA) while voluntary bodies will include the South African Institute of Chartered Accountants (Saica), the South African Institute of Tax Practitioners (Sait) and the South African Institute of Professional Accountants (Saipa).

The latter parties have not officially been granted “recognised controlling body” status yet, but Stiaan Klue, chief executive officer of the Sait, says

the parties meet all requirements and the process will be finalised within the next two weeks.

According to Sars documents, the changes aims to ensure that tax practitioners possess certain minimum qualifications and experience, regularly update their knowledge base and that their clients have recourse in cases where improper advice was given. It is envisaged that this will improve compliance with tax regulations and general accuracy.

While it is very difficult to estimate what the effect of the new regulations will be, a discussion paper released in 2006 indicated that more than half of tax practitioners (at that stage 21 000) did not hold any qualification relevant to taxation, says Klue. “That was a real concern to government.”

Klue says there are currently around 33 000 tax practitioners in South Africa. Roughly 17 000 of these practitioners do not belong to any of the qualifying bodies, he says.

In some cases, tax practitioners have previously only registered with Sars in order to get preferential queuing privileges at offices. In many instances, “tax practitioners” were basically messengers, he says.

Klue says from Sait’s experience as a professional body, around 5 000 of the total number of tax practitioners are in actual fact messengers, who will probably leave the system when the new regulations come into effect. Of the remaining 28 000, between 4 000 and 5 000 are part-time practitioners – retired teachers and retired Sars officials – who are doing it as a hobby, who could also fall by the wayside because of the more rigorous process.

About 6 000 are full time bookkeepers who are submitting PAYE returns and VAT returns, but do not hold a matric qualification, and will need to upskill in order to remain in the system, says Klue.

“A lot of these guys do have more than five years’ experience but they do not hold a NQF level 4 (matric) qualification.”

The technology and e-filing system Sars has in place will result in a situation where practitioners won’t be able to file on behalf of clients if they are not registered with Sars. For the latter registration to happen practitioners will have to prove that they are registered with a recognised controlling body. Under the new dispensation, non-compliance will be a criminal offence, he says.

“I think you’ll now see that those practitioners who have taken chances and who have presented themselves as competent tax practitioners (when in actual fact they are not) to the public – they will disappear out of the system.”

“We’ve seen a similar experience with the Financial Services Board’s compliance exams that was implemented a few years ago.”

Klue says only around 35% of the intermediaries remained in the system because of the new regulatory requirements.