DO YOU HAVE A GOOD RELATIONSHIP WITH YOUR ACCOUNTANT OR TAX CONSULTANT?
We all know that successful businesses rely upon good relations with their suppliers. In the past, smaller businesses have tended to focus on their relationships with all kinds of suppliers and often placed their accountant or tax advisor at the back of the queue in terms of importance.
I believe that the order of things has changed drastically this past year. As we have come to see, businesses which were not compliant suffered greatly in 2020 by missing out on various initiatives launched by government and the private sector to provide financial aid to those who were negatively affected by the Covid19 pandemic. Very quickly, accountants and related professionals were called upon to assist with getting financial and tax affairs in order and with financial aid applications. In so many ways, accountants and similar professionals have been the unsung heroes during this pandemic, working long hours (often at no or little fees) to assist clients who were financially distressed.
For a long time, I have been advocating that businesses need to establish sound relationships with their professional advisors. A good professional accountant is capable of doing far more than simply capturing financial transactions and will also look at business management (including cashflow and forecasting), strategic planning, systems implementation, tax structuring and yes, even marketing. A clever business certainly wants to tap into the real skills offered by a professional accountant.
One of the most important reasons to have a good relationship with your professional accountant is to minimise risk to your business from non-compliance. Not only is non-compliance administratively burdensome to resolve but can also be very costly. Penalties and interest levied by SARS and other governmental bodies for non-compliance can easily cripple a business. Such disciplinary measures are applied for non-submission of returns as well as non- or underpayment of returns.
The risk of such financial penalties was escalated recently when various changes to the Taxation Laws Amendment Act (TLAA) and Tax Administration Laws Amendment Act (TALAA) were signed into law in January 2021. Traditionally, SARS had the power to fine or imprison taxpayers for wilful non-compliance only, whereas now SARS has the power to fine or even imprison a taxpayer for negligent actions too (intent is no longer required to be proven). Making an error on a tax return could, for example, constitute negligent action. The result of these amendments is that ordinary taxpayers could be criminalised for negligence (however small).
Time will tell how SARS will act upon the above-mentioned changes, but, for now, my advice would be to get to know your accountant or tax consultant as well as possible.
More about Bernard Schoeman
Bernard studied BCom majoring in information systems and accounting at the University of Cape Town and qualified as a Chartered Accountant (SA) in 1997 after completing of his articles with Deloitte & Touche. Bernard has extensive international and local experience having worked for nearly three years with financial institutions in the UK (London) and having audited numerous companies listed on the JSE in South Africa. He is a member of the South African Institute of Chartered Accountants.