Tax Practitioners: Do You Know That You Need A Signed Mandate?
In my last tax webinar, 60% of the respondents in a poll advised that there was no signed mandate between their Tax Practice and their taxpayer clients. Tax Practitioners need to know that there is in fact no longer a choice in this as a properly worded mandate is absolutely essential and a condition of using the SARS e-Filing website. It’s also a question of the Tax Practitioner limiting their risk exposure protecting them against SARS and claims from their clients. Having a properly signed mandate is a condition of making use of the e-filing system, either the website or through an independent service provider.
The SARS terms and conditions say:
“If the e-Filer is a registered Tax Practitioner or a person referred to in section 240(2)(d) of the Act, the e-Filer must obtain a written mandate from the taxpayer, which mandate must be provided to SARS and at a minimum –
- detail the authority granted to the e-Filer by the taxpayer; and
- contain an acknowledgement by the taxpayer that any and all liabilities under a tax Act remains with the taxpayer.”
Now to add to the risk profile of a Tax Practitioner we have tax law that is changing. Non-compliance in producing tax returns in terms of a tax act could be a criminal offence. E.g. failure to advise SARS of a change in address or a clerical error on a return could result in a criminal record. In other words where there is no wilful intent a taxpayer could land up with a criminal record as SARS does not have to prove wilful intent when the legislation of the draft bill is enacted. Clearly the constitutionality of this has to be tested.
Tax Practitioners need to think about this potential change in law and how it will affect the risk profile of their practice. Owing to the complications in tax law there are many issues that arise in tax return production where there is no wilful intent. So, imagine being a Tax Practitioner and your client gets arrested for a tax error which was your fault and you don’t have a mandate. The mandate is to protect you and is a method of passing the risk of providing tax services back to your taxpayer client.
What must the mandate contain? The following clauses are a must in a mandate but obviously there is a lot more:
- MY FIRM the e-Filer acts as a duly authorised agent on your behalf.
- You will be liable to SARS for the due and timeous fulfilment of all your obligations towards SARS.
- Any information submitted by My Firm to SARS by means of the e-Filing service will be based on information received from you and you are responsible for ensuring that such information is true and correct.
- Before we submit any information to SARS by means of the E-filing service we will need your confirmation that the information being submitted is a true and correct reflection of what you have provided.
- MY FIRM will not be responsible for any tax liability imposed by SARS for any reason whatsoever.
We have designed a mandate produced automatically by Accfin Sky Tax which is provided to all our users, which can automatically be emailed and digitally signed by your clients, and returned automatically to Sky Tax.
The mandate is also used as an educational document for taxpayer clients as they don’t actually know what is involved in the complications of tax and do not understand when things go wrong or SARS wants a verification or an audit. All this is set up in the mandate letter so that there is understanding which will protect the Tax Practitioner against claims.
A mandate can be set up to last for a couple years, perhaps up to three. Where there are changes in laws that effect the mandate it should be updated as soon as possible.
For a copy of the mandate click here: https://accfinsoftware.lpages.co/accfin-sky-tax-mandate/.