South African Revenue Service (Sars) Commissioner Edward Kieswetter. Picture: GCIS
By: Darren Britz and Bronwin Richards
During the April 2024 South African Revenue Service’s (Sars’s) revenue results announcement media conference, Sars commissioner Edward Kieswetter brought to light concerning observations regarding non-compliance and delinquent behaviour by tax practitioners.
By drawing a direct correlation between non-compliant tax practitioners and their “clients [who] are equally delinquent”, his remarks underscored the critical importance of taxpayers to carefully assess the quality and compliance of the professionals they engage to handle their tax affairs.
Kieswetter revealed a troubling trend - a significant number of tax practitioners are themselves non-compliant with tax regulations. He disclosed, “[w]e’ve identified 53 tax practitioners who remain non-compliant in their own taxes, which explains in part how they advise their clients and why their clients are equally delinquent”. This revelation emphasises the crucial link between practitioner compliance and the advice they offer to clients.
Moreover, Kieswetter highlighted specific instances of non-compliance within professional firms. “[I]n one law firm alone, in The Square in Sandton, we found 14 partners of this law firm who underestimated their own provisional taxes,” Kieswetter stated. Such instances underscore the importance of holding professionals to higher standards of compliance.
Taking decisive action, Sars has initiated processes to revoke licences of non-compliant practitioners. To date, eight licences have already been revoked, and further criminal investigations are under way against others found to be in breach of tax obligations.
Kieswetter’s bold comments are likely to resonate with many in the tax fraternity who are consulted by clients having previously received low-quality and aggressive tax advice provided by certain practitioners. In certain cases, the damage has already been done, and the new adviser is tasked with cleaning up the historical tax mess created.
A final comment made by the commissioner which serves as a warning to taxpayers: “The above observations in future place a lot more focus on firms who promote certain schemes, and taxpayers should take care when they approach tax practitioners.”
At the heart of this issue lies a fundamental truth that not all tax professionals operate with integrity and compliance, both with respect to their personal tax affairs and those of their clients. Kieswetter's observations serve as a sobering reminder of the risks associated with non-compliant tax practitioners. The repercussions of poor-quality, aggressive tax advice can be severe.
Taxpayers serve well to take heed of Kieswetter's warning and choose their tax practitioners wisely. “Do your due diligence.”
* Britz is a Partner and head of tax legal and Richards is a tax attorney at Tax Consulting SA.
PERSONAL FINANCE
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