You are ultimately responsible for filing your income tax return, even if a tax practitioner submits the return on your behalf. And if the South African Revenue Service (SARS) levies a penalty and interest for the late or non-submission of your return, you – not the practitioner – are liable to pay it.
However, Professor Sharon Smulders, the head of tax policy technical and research at the South African Institute of Tax Practitioners (Sait), says that if your return was filed late because of a failure on the part of a practitioner or accountant, such as neglecting to remind you to submit your paperwork in time, this constitutes unprofessional conduct and is a breach of the code of conduct prescribed by most professional bodies to which tax practitioners must belong.
“If a tax practitioner is responsible for completing your tax return and fails to inform you of the relevant deadlines and the documents you need to send to him or her, that’s not professional and not in keeping with the code of conduct,” Smulders says.
In such a case, you can lodge a complaint with the professional body to which your practitioner or accountant belongs, and he or she should be disciplined if found to have been negligent.
You should have a contract with your tax practitioner, explaining clearly what is required of you and what is expected of the professional rendering the service, Smulders says. “It should be made clear to you that you are still responsible and liable. However, if your tax practitioner fails you, you should have recourse,” she says.
The contract should take the form of a letter of engagement, which your tax practitioner should “automatically” give to you when you become his or her client.
Smulders says: “The letter of engagement needs to be detailed so that you know what you are paying for, what the fee includes, and what happens if SARS requires additional supporting documentation or information after you have submitted your return or if the assessment received disallows certain or all of your expenses. Who is responsible for requesting reasons for this discrepancy and who is responsible for objecting to the assessment if you do not agree with it or the reasons provided? Assigning responsibility for objecting to penalties would also need to be clarified in this engagement letter.”
Mohammed Lorgat, the project director for public sector and ethics at the South African Institute of Chartered Accountants (Saica), says the recourse you have depends on the type of accountant or tax practitioner you have engaged.
If your tax practitioner is a chartered accountant and a member of Saica, you can complain to Saica, and the member will be taken to task, he says.
If your tax practitioner does not exercise the necessary due care by advising you adequately as to the documents you are required to submit, as well as the timelines for the submission of documents, this would constitute unprofessional conduct, Lorgat says. “One of Saica’s guiding principles is professional competence. This includes exercising due diligence and care on behalf of your clients.”
Failure to submit or late submission of a tax return due to the negligence of the tax practitioner shows a lack of professional competence, Lorgat says.
But he says you shouldn’t expect your tax practitioner to send you numerous reminders.
“The responsibility for submitting documents rests with the client, so it is common for just one reminder to be sent from a practitioner,” he says. It would, however, depend on your letter of engagement.
“We give our members a template letter of engagement, which covers the basics. It doesn’t deal with penalties, but there is nothing stopping you from editing the letter to provide for that,” Lorgat says.
Smulders says three reminders is sufficient proof that the tax practitioner was diligent in carrying out his or her duties, as long as all of these reminders are documented either via email or by making a note on the client’s file of the date and time of the telephone call.
“It is better if all of this is clarified in the engagement letter, but this is not always practical. As long as the ‘reasonable man’ test could be satisfied in the absence of a clear stipulation in the letter, then the practitioner would be covered.”
She says that while tax practitioners can be held accountable, you also need to take responsibility and “get involved in your tax affairs”.
Smulders says professional bodies representing tax practitioners are eager to deal with those who give the profession a bad name. SARS is also concerned; the Tax Administration Act has made it mandatory for tax practitioners to register with SARS and a recognised controlling body.
There are about 17 000 tax practitioners who have registered with SARS and a controlling body so far.
The controlling bodies are:
– The Chartered Institute of Management Accountants;
– Chartered Secretaries Southern Africa;
– The General Council of the Bar of South Africa;
– The Independent Regulatory Board for Auditors;
– The Institute of Accounting and Commerce;
– The SA Institute of Chartered Accountants;
– The SA Institute of Professional Accountants;
– The SA Institute of Tax Practitioners;
– The Association of Chartered Certified Accountants;
– The Association of Accounting Technicians Southern Africa; and
– The Law Society of South Africa.
Before you engage a tax practitioner, you need to establish with which body the practitioner is registered.If you are already using a practitioner and do not know which body he or she belongs to, you can ask the Sait to check for you. You can then complain to that body about your practitioner’s conduct, should you need to.
Smulders says practitioners who are not members of any of these bodies are trading illegally.
An administrative penalty is one a taxpayer must pay for the late or non-submission of a tax return. According to the South African Revenue Service (SARS) website, “any taxpayer who does not submit their return will incur this penalty and has to pay [it] to SARS”.
A penalty is also imposed for failure to register as a taxpayer.
The amount of the penalty is determined according to your taxable income.
SARS will levy the penalty each month that your return remains outstanding.
You can dispute the penalty, but need to provide a valid reason for not submitting your return.
On the taxable income amounts bracketed below, the following penalties are payable:
Below R250 000: R250
R250 001 to R500 000: R500
R500 001 to R1 000 000: R1 000
R1 000 001 to R5 000 000: R2 000
R5 000 001 to R10 000 000: R4 000
R10 000 001 to R50 000 000: R8 000
Above R 50 000 000: R16 000
Tax ombud receives service complaints
If you are unhappy with service you receive from the South African Revenue Service (SARS), you can complain to the Tax Ombud, retired Judge Bernard Ngoepe, who took office at the end of last year. The jurisdiction of his office extends to service issues only. Therefore, it cannot accept a complaint about your liability for tax or the amount of tax due, nor can it review a matter to which you have objected, taken on appeal or taken to the Tax Court.
Before you take a complaint to Ngoepe’s office, you should try to resolve it with SARS through its Service Monitoring Office. Email email@example.com, telephone 0860 12 12 16 or fax 012 6706906. Email the Tax Ombud’s office at firstname.lastname@example.org, telephone 012 431 9105 or fax 012 452 5013.