Tax advisors in South Africa must sign up with a supervising body to carry on giving advice in a bid to put rogue consultants out of business.
The move has been made by the South African government to combat increasing problems with tax advisers offering duff information and fleecing clients.
Now, the South African Revenue Service (SARS) has given a July 1 deadline for all tax advisers to register with them via one of five controlling bodies which will be recognized by the country’s Tax Administration Act.
The move is the first in a series aimed at improving tax advice in the country, with a second phase to establish an independent regulatory board for tax practitioners.
That board will be created 18 months after the register starts to give time for a proper review.
Potential problems
All tax practitioners in South Africa, even those who are currently registered with SARS, will have to re-register in order to comply and stay in business.
Faith Ngwenya, the standards executive at the South African Institute of Professional Accountants (SAIPA), is now urging all taxpayers to question the registration status of their tax practitioner.
She added: “By not doing so, individuals and businesses run the risk of finding out that their practitioner is no longer allowed to operate and they will then have to find a registered practitioner.”
One potential problem is that many tax practitioners may belong to a professional body which is not recognised by SARS, and may struggle to requalify with a supervisory body by the July deadline.
To underline the problem, SAIPA is one organisation that demands members have relevant academic qualifications, several years of verifiable industry experience and that they must pass an examination before joining.
Tax ‘fishing’ uproar
Meanwhile, SARS is also under attack for launching ‘tax fishing expeditions’ that fail in court and leave taxpayers facing huge legal bills when they have done nothing wrong.
Delegates at a tax conference heard that a growing number of court actions against tax assessments could lead to the end of the open-ended investigations by the revenue service.
The problem lies with the new Tax Administration Act which gives SARS powers to search and seize information without a warrant, but the courts have since reined in this move by using a Customs and Excise Act to give taxpayers a right to privacy.
Delegates were told that to avoid a costly exercise in fighting an assessment in court, their clients should carefully read the audit letter they have received to find out how the tax man has arrived at their figures and prepare the case on why they are wrong.