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Whether client non-compliance creates any SARS obligations for tax practitioner

Wednesday, 02 April 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

The answer to this query is based on legislation as at 2014/04/02.

Q: I have a client whom we registered for VAT about 12 months ago. Since registration, the client has refused to declare his VAT payable, even though we have advised him to do so. My question is whether this creates a liability towards my firm? Should we inform SARS of his non-compliance and can our firm be held responsible for not declaring his non-compliance to SARS?


A: Although a taxpayer may make use of a tax practitioner, the ultimate responsibility still rests with the taxpayer to ensure that its tax affairs are in order. The only instance in which a firm can be held liable is when the engagement letter stipulated that the firm would, for example, submit the client’s VAT201’s but did not do so without documenting any valid reason.

The South African Taxation Standard 7000 Knowledge of error: Administrative proceedings provides guidance for a SAIT tax practitioner who becomes aware of an error in a return that is the subject of an administrative proceeding. Although this standard is not relevant to your situation, it provides some useful guidance as to what steps need be taken by a SAIT tax practitioner when non-compliance comes to the front. Paragraph 9 – 11 of the said Standard provides the following guidance.

 ‘.09 When the SAIT tax practitioner is engaged to represent the taxpayer in an administrative proceeding with respect to a return containing an error of which the SAIT tax practitioner is aware, the SAIT tax practitioner should advise the taxpayer to disclose the error to SARS. If the SAIT tax practitioner believes that the taxpayer could be subject to criminal prosecution, the taxpayer should be advised to seek specialist advice, before taking any action.  

.10 It is the taxpayer’s responsibility to decide whether to correct the error. If the taxpayer does not correct an error, a SAIT tax practitioner should withdraw from representing the taxpayer in the administrative proceeding and consider whether to continue a professional or employment relationship with the taxpayer.  

.11 A SAIT tax practitioner should consider consulting with his or her own legal counsel before deciding on recommendations to the taxpayer and whether to continue a professional or employment relationship with the taxpayer.

The potential for breaching client confidentiality or infringing tax law and the potential adverse impact on a taxpayer of a SAIT tax practitioner’s withdrawal, as well as other considerations may create a conflict between the SAIT tax practitioner’s interests and those of the taxpayer.’ It is of utmost importance to remind a client of his rights and obligations under the different tax Acts and to document all responses given by the client in, for example, the working papers and to store all written correspondence in this regard. It is submitted that if you have done so, that you cannot be held responsible for any non-compliance on your client’s side. It is further submitted that you need not inform SARS of the client’s non-compliance.  


Whether the firm may be held liable for the non-compliance may depend on the particulars of the engagement letter/contract concluded with the client. It is recommended that you familiarise yourself with the South African Taxation Standards to which can provide useful guidance in similar circumstances. The South African Taxation Standards can be found at the following link: Making sure that all communication of the breach of the tax laws to your client is documented is of vital importance to protect your firm from any potential legal claims in this regard.

The decision to continue a professional relationship with the taxpayer also needs to be considered by your firm in light of the client's response to you pointing out their errors.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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