Directors of tax services firm not registered tax practitioners, but junior employee is registered
13 November 2014
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Posted by: Author: SAIT Technical
Author: SAIT Technical Q: I have heard
of instances where the directors of a firm offering tax services are not
registered tax practitioners but the junior tax consultant is registered. Is it
ethical for the directors to 'ride on the coat tails’ of the junior in order
for them to continue offering tax advice? A: It would seem
as if the firm is relying on sec 240(2)(d)(ii) of the Tax Administration Act
(No. 28 of 2011) (hereinafter ‘TAA’) to prevent the directors or senior
consultant from registering. The said section states the following (emphasis
mine): ‘(2) The provisions
of this section do not apply in respect of a person who only— … (d) provides the advice or completes or assists in
completing a return— … (ii) under the supervision of a registered tax practitioner
who has assigned or approved the assignment of those functions to the person.’ Sec 240(2)(d)(ii) therefore contains a dual test. First of
all the work of the non-registered directors must be performed under the
supervision of the registered tax practitioner and the tax practitioner needs
to assign or approve the functions that need to be performed by the
non-registered members. In terms of the normal master-servant principle, it is
highly unlikely that a junior staff member would supervise and sign off the
work of more senior staff members (not to mention directors of the firm). It is
furthermore highly improbable that the junior employee would refuse to sign off
work done by the senior personnel and accordingly refuse to submit the work
performed to the client. Even though the directors may factually be absolved from
registering due to the application of sec 240(2)(d)(ii), the mandate of the
different employees and directors would need to be investigated to determine
whether there is a clear reporting line running up to the junior employee and
whether the junior employee in fact signs off all of the work and accepts
responsibility therefore in terms of sec 240(2A). Disclaimer: Nothing in
this query and answer should be construed as constituting tax advice or a tax
opinion. An expert should be consulted for advice based on the facts and
circumstances of each transaction/case. Even though great care has been taken
to ensure the accuracy of the answer, SAIT do not accept any responsibility for
consequences of decisions taken based on this query and answer. It remains your
own responsibility to consult the relevant primary resources when taking a
decision.
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