The Tax Administration Act 28 of 2011 (''TA Act'') introduced certain administrative provisions governing Tax Practitioners.
In terms of section 240(1) of the TA Act, any natural person who provides advice to another person in respect of the application of a tax act or who completes or assists in completing a tax return must: (1) register with the South African Revenue Service ("SARS") as a tax practitioner; and (2) register or fall under the jurisdiction of a recognised controlling body. Professionals, such as attorneys, falling under the South African Law Society can (and where applicable, must), therefore, register as Tax Practitioners.
Section 241 of the TA Act allows a senior SARS official to lodge a complaint with a 'recognised controlling body' if a registered Tax Practitioner commits certain listed offences in relation to a taxpayer's affairs.
It is therefore the duty of the Tax Practitioner to provide advice in a manner that is not grossly negligent or given with an intention to assist a taxpayer to avoid or unduly postpone the performance of an obligation imposed on the taxpayer. Taxpayers can accordingly with some comfort rely on advice provided by a Tax Practitioner.
The duty imposed on a Tax Practitioner also has an additional benefit. Where a taxpayer has relied on and conducted its tax affairs based on an opinion obtained from a registered Tax Practitioner, SARS must, in terms of section 223(3)(b) of the TA Act, cancel a penalty imposed on the taxpayer for a case where there has been a substantial understatement. The opinion must be based on a full disclosure of the facts and it must confirm that the taxpayer's position will more than likely be upheld if the matter proceeds to court.
There is also a further advantage where the tax advice is provided by a Tax Practitioner who is an attorney, as legal advice privilege will in most cases be applicable. In this regard, communications with legal advisors, who are acting in a professional capacity and which communications are made for the purpose of obtaining legal advice, are privileged and need not be disclosed to SARS. Essentially, this privilege extends to all communications directly related to the seeking or giving of the advice.
In conclusion, there are obvious benefits to a taxpayer engaging the services and relying on the advice of a registered Tax Practitioner. It should be noted though that a taxpayer is ultimately responsible for his or her own tax affairs and does not have carte blanche to unquestionably rely on advice from a Tax Practitioner.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.