Are you a Tax Accountant?

Mr Cassim’s owns a shoe retail shop in the commercial centre of Durban. He pays his taxes and submits his tax returns regularly and on time. He has a very good accounting firm taking care of his accounting and tax affairs.

Following the submission of his latest returns by his accountant via e-filing, SARS requested Mr Cassim’s accountant to submit some supporting documents to his tax returns. This is nothing unusual. SARS often calls for supporting documentation to verify the information contained in a filed tax return.

But then SARS called Mr Cassim directly for an appointment to further their investigation.

Mr Cassim is a Tax Risk Insurance policyholder and calls Tax Risk Underwriting Managers before the meeting for some advice. This was the correct thing to do, as this meeting would clearly have infringed on Mr Cassim’s rights as a taxpayer. He might have inadvertently incriminated himself, as Mr Cassim is not a tax expert.

Tax Risk Underwriting Managers notified SARS that our tax attorney service provider will be acting on behalf of Mr Cassim. We were able to successfully represent Mr Cassim in this matter, ensuring that SARS followed due process as required by the Tax Administrations Act and that Mr Cassim’s rights were equally protected.

Botha and Partners is an accounting firm in Mpumulanga. Johan Botha recommends that all his clients buy a Tax Risk Insurance policy either from The Hollard Insurance Company or through their financial advisor.

When we asked why they had the following story to tell:

One of his long-standing clients was randomly selected for audit by SARS. His client owns a medium-sized business, but times are tough and there is not a lot of spare cash in the business. Johan knows this all too well – he is her accountant, after all.

To resolve the audit with SARS required four days of Johan’s time, as the taxpayer’s accountant. But here’s the issue; Johan was not able to charge his client for his time spent defending the audit because he knew his client had cash flow issues.

So he made a decision, in the best interest of his client, to do the work for free, rather than to leave his client to her own devices.

The problem is that the accounts’ time is money. If accountants don’t charge for the work they do, they will soon not have a business.

With a Tax Risk Insurance policy, Johan was able to send his invoice to Tax Risk Underwriting Managers for payment and focus on conducting a proper tax audit defence, on behalf of his client.

Our client is a Trust, which holds the interests of a farm in the Western Cape.

Unbeknownst to the rest of the Trustees, one Trustee is audited by SARS and found wanting. SARS then proceeded to also conduct an audit on the Trust.

During the audit, SARS disallowed all the VAT inputs and underlying expenses in the farm for the past 10 years. The reason for this decision was not made clear.

This translated into an outstanding tax bill to SARS of just short of R10 million. Tax Risk Underwriting Managers stepped in to defend the case. After the cost of R150 000 in professional defence fees – SARS conceded and overturned their original decision.

The matter was settled on a PAYE short payment of R2 000, which occurred due to an administrative error on the part of the Trust. The Trust then paid this outstanding R2 000 to SARS, together with a small amount in penalties and interest.