Clients should check tax practitioners' compliance - Kotze

Based on SARS publications, tax practitioners represent an estimated 3 million taxpayers of the approximately 12 million on the tax register. However, a number of the 12 million are employees required to be registered only due to payroll legislation despite their taxable incomes being very low.

Questionable compliance levels

"It can be safely assumed that a tax practitioner of some sort represents about 25-30% of the South African tax base," says Dirk Kotze, tax partner at global audit, tax and advisory firm Mazars.

"If approximately 50% of the tax practitioners on the register are non-compliant with their taxes, then 10-15% of taxpayers are entrusting their tax affairs to non-compliant practitioners. If that is the case, just how compliant can those taxpayers expect their own tax affairs to be?"

Initially there was no formal regulation by SARS of tax practitioners. In fact, many tax practitioners were not even required to belong to independent organisations to facilitate communication, training or even discipline. As such, it may be said that while tax practitioners were registered this was mainly in order for them to offer services to their clients rather than be properly regulated.

A requirement of the latest legislative amendments was that any tax practitioner must belong to a controlling body and the deadline date for registration with a controlling body was 30 June 2013.

Check for compliance to avoid risks

At this stage the reason for the requirement for an independent registration appears to be so that SARS may reduce the number of unregulated tax practitioners and clients may lay complaints about the tax practitioner to a controlling body. Whether this will be extended in the future to include training requirements, setting different levels of competency and standards depending on the area of tax work conducted by the tax practitioner or channelling communication to tax practitioners through these bodies remains to be seen, but seems highly likely taking into account the contents of various discussion documents of the past.

"While the intentions of SARS, professional bodies and compliant tax practitioners are all good and well, delinquent tax practitioners will continue to practice as long as they attract business," adds Kotze. This may lead to serious potential tax risk for the taxpayer.

To avoid these risks and costs and to ensure that they are themselves compliant it may be time for taxpayers to confirm that their tax practitioner is compliant, and thus able to help them stay on the straight and narrow. A first step would be to request the tax practitioner to provide proof of the updated registration with a controlling body and that this information was provided to SARS by the deadline date.

For more information, go to www.mazars.co.za.