Return is outstanding - SARS - Accounting firm screw-up

[RedViking]

I need some advice and how to handle this situation.

I am using an Accounting firm to do my Taxes for me. I approached them in 2015 and asked if they can please bring all my TAX up to date, as my knowledge then was very limited, had no idea how TAX worked and the way I receive an income is not the norm in SA.

So they did all my returns for the outstanding years and penalties and has been doing my TAX up till now. (Provisional) Or so I thought:

I now received a letter "SARS have advised that you 2015 tax return is outstanding."

The response from the Accounting firm is something like this "I didn't ask them to do the 2015 TAX year." Which of course is rubbish. So they did everything up to 2014, 2016 - up-to-date
I find this unacceptable as it is also a lot of money I now have to pay what I thought was all sorted out. The whole point why I approached the Accounting Firm was to make sure I don't owe money anymore and now I am back at square one.

I understand the money needs to be payed (oh crap ) but I find it unacceptable that I wasn't informed during the 2015 TAX year or any other time. I was thinking that all my fiances are in order.

Should I hold the accounting firm responsible for the mess up?

Any advice on how I should approach the situation?

 

[seted]

Ultimately it is your responsibility to ensure that your taxes are up to date. I’m sure that SARS is regularly told how the accountant is to blame. SARS is not hugely sympathetic to taxpayers who close their eyes and hope that the accountants are doing their work properly.

If the accountancy firm said that they would do the 2015 return (did they bill you for this?), and then failed to do so, that would be negligence and you can refer the matter to their regulatory body (SAICA, SAIPA, etc).

The accountants will probably have professional indemnity insurance against claims of negligence.

Any damages that you have suffered as a result of their failure to file the 2015 return (interest, income tax penalties, understatement penalties, penalties for late filing, etc) can be claimed from the accountancy firm. They can then claim from their insurance.

If they refuse to settle, then you should contact an attorney.

 

[xrapidx]

SARS are also desperately looking for reasons to either not pay out, or bring in extra cash.

My case - they denied my vehicle claim because my end odo reading of the previous year was 84km different from my starting odo reading of the current year, then also because the odo start/end reading wasn't reflected on my travel log - even though its on the ITR12.

My wife - they refuse to pay out because her 2005 return is outstanding - which is before she started working. She now needs to submit a affidavit stamped by the police.

 

[RedViking]

Ultimately it is your responsibility to ensure that your taxes are up to date. I’m sure that SARS is regularly told how the accountant is to blame. SARS is not hugely sympathetic to taxpayers who close their eyes and hope that the accountants are doing their work properly.

If the accountancy firm said that they would do the 2015 return (did they bill you for this?), and then failed to do so, that would be negligence and you can refer the matter to their regulatory body (SAICA, SAIPA, etc).

The accountants will probably have professional indemnity insurance against claims of negligence.

Any damages that you have suffered as a result of their failure to file the 2015 return (interest, income tax penalties, understatement penalties, penalties for late filing, etc) can be claimed from the accountancy firm. They can then claim from their insurance.

If they refuse to settle, then you should contact an attorney.

Thanks for your input. Looking back over my emails they never billed nor did the 2015 return. Unfortunately I didn't pick it up nor question it, really thinking they know what they are doing as I just get an email requesting authorisation for them to process the payment.

This was the first payment in 2015- June



As it was in 2015 and we just brought all my TAX up to date until 2014, I assumed we will now be doing the returns as usual. It makes no sense to me why they would skip a TAX year?

I understand this "Ultimately it is your responsibility to ensure that your taxes are up to date" but if there is a way to fight this due to negligence or at least get an explanation from them and how we are going to solve the issue that will help. A years return is a lot of money, specially if you thought everything is up to date by the book.

I have emailed them and requested a meeting with the accountant and the director.

Now I know a bit more about TAX and is busy doing a business course through UNISA, won't be trusting an Accounting firm again.

Is it normal for an accounting firm to not bother or inform their client if a TAX year has been completely left out?

 

[RedViking]

SARS are also desperately looking for reasons to either not pay out, or bring in extra cash.

My case - they denied my vehicle claim because my end odo reading of the previous year was 84km different from my starting odo reading of the current year, then also because the odo start/end reading wasn't reflected on my travel log - even though its on the ITR12.

My wife - they refuse to pay out because her 2005 return is outstanding - which is before she started working. She now needs to submit a affidavit stamped by the police.

SARS is a %#$%^. Makes me angry when you give responsibility to someone and they just like SARS.

 

[seted]

Is it normal for an accounting firm to not bother or inform their client if a TAX year has been completely left out?

If their job was to assist/advise you with all of your tax issues, then yes they should have brought 2015 to your attention. If their job was only to deal with specific years, then no.

 

[RedViking]

If their job was to assist/advise you with all of your tax issues, then yes they should have brought 2015 to your attention. If their job was only to deal with specific years, then no.

Thanks. No, they do all my tax. Will see if they respond to my mail.

 

[RedViking]

So I received an email back. They just say I never instructed them to do a return for 2015, the service they have given me up to now was over and above of what is expected and they did it at no extra cost. Makes me wonder what the hell I paid them for then.

This makes me sick.

Anyways, I guess that is the way business is done here.

 

[saturnz]

So I received an email back. They just say I never instructed them to do a return for 2015, the service they have given me up to now was over and above of what is expected and they did it at no extra cost. Makes me wonder what the hell I paid them for then.

This makes me sick.

Anyways, I guess that is the way business is done here.

so have you confirmed with SARS the return is outstanding?

I also have outstanding returns on my efiling account, but I just ignore it, according to SARS its a bug of sorts




as for you trying to shift blame to the accountant by relying on your ignorance, that's not going to work unfortunately

 

[RedViking]

as for you trying to shift blame to the accountant by relying on your ignorance, that's not going to work unfortunately

You are right that I didn't have much knowledge back then, therefore approaching the Accountants. Why do you say I am shifting the blame to them if that is what they were instructed to do, did so, but manged to skip a year?

With regards to SARS, I know that I can't put the blame on someone else. With regards to the Accountants, I feel they are responsible for the mess, or to some degree at least.


Would be interesting to get input from someone that is an Accountant / work for an Accounting firm.

 

[HavocXphere]

SARS are also desperately looking for reasons to either not pay out, or bring in extra cash.

Yeah read somewhere that the number of returns being delayed due to challenges shot up dramatically too..

They just say I never instructed them to do a return for 2015, the service they have given me up to now was over and above of what is expected and they did it at no extra cost.

Thanks. No, they do all my tax. Will see if they respond to my mail.

Check the actual contract you signed with them. It's highly unlikely that it's as broad as you think.

Generally I'd expect this type of work to be both contracted & billed on a per tax year, per tax type basis.

I guess it's possible that some of the smaller firms do multi-year "they do all my tax", but it's fairly improbable for various reasons.

Would be interesting to get input from someone that is an Accountant / work for an Accounting firm.

Based on the response you paraphrased chance are good that you're standing on flimsy ground here & misunderstood the terms of the agreement.

That's going on very little info though so the above is a guess at best.

 

[saturnz]

You are right that I didn't have much knowledge back then, therefore approaching the Accountants. Why do you say I am shifting the blame to them if that is what they were instructed to do, did so, but manged to skip a year?

lets say for example you get someone to build you a house, do you just give them the money and come back when the house is complete? or do you do periodic checks to see if everything is still going as planned?

edit: in the other building I am a owner in the agent paid VAT to SARS of over R50m over a period of 15 years which they were not supposed to and this was discovered a couple of months ago.

Owners were ready to sue the trustees if they did not resolve the issue, the agent was sort of not in the equation.

 

[RedViking]

lets say for example you get someone to build you a house, do you just give them the money and come back when the house is complete? or do you do periodic checks to see if everything is still going as planned?

I see what you mean. It is my fault that I didn't check up on them. It just never crossed my mind, aspecially with my lack of knowledge in the area. I would still think a professional firm should be able to carry responsibility.
I think I can now just as well start learning and doing everything myself, and just get advice when I'm stuck. This is an expensive lesson to learn. There is no point for me to hire someone to do the job if I still need to do it for them.

Flip, so frustrated.

 

[saturnz]

I see what you mean. It is my fault that I didn't check up on them. It just never crossed my mind, aspecially with my lack of knowledge in the area. I would still think a professional firm should be able to carry responsibility.
I think I can now just as well start learning and doing everything myself, and just get advice when I'm stuck. This is an expensive lesson to learn. There is no point for me to hire someone to do the job if I still need to do it for them.

Flip, so frustrated.

I take it you are not up to date how corruption works? its basically everywhere, even in major accounting firms which have their codes of conduct and ethics

don't take anything for granted

and yes there is no point in hiring someone unless you have really complex tax affairs (read- super rich)

I do my own taxes, I haven't paid income tax for a few years now and I've been audited many times over.

 

[RedViking]

I take it you are not up to date how corruption works? its basically everywhere, even in major accounting firms which have their codes of conduct and ethics

don't take anything for granted

and yes there is no point in hiring someone unless you have really complex tax affairs (read- super rich)

I do my own taxes, I haven't paid income tax for a few years now and I've been audited many times over.

What you say is true. When I make a mistake on my drawings, which does happen now and then, I admit to the client that I made a mistake, here is my solution, I will give them discount on the next project. The issue has always been resolved swiftly and clients appreciate it. In fact they trust you more because they realise you take responsibility for the work you do.

But yes unfortunately this is the culture we have.

Anyways, I need to find a way to pay the money before end of next month.
This has been a crap month and this is the last thing I needed...

Think I need to go to the beach a bit...

 

[RedViking]

Yeah read somewhere that the number of returns being delayed due to challenges shot up dramatically too..



Check the actual contract you signed with them. It's highly unlikely that it's as broad as you think.

Generally I'd expect this type of work to be both contracted & billed on a per tax year, per tax type basis.

I guess it's possible that some of the smaller firms do multi-year "they do all my tax", but it's fairly improbable for various reasons.


Based on the response you paraphrased chance are good that you're standing on flimsy ground here & misunderstood the terms of the agreement.

That's going on very little info though so the above is a guess at best.

Yes they bill me per tax year. I just didn't realise they skipped a TAX year as I went to them in March 2015, I assumed everything that was outstanding from 2011 - 2015 and the fees and everything would have included it. They also processed the 2016 TAX year. As I have now already explained it just never crossed my to check everything.
Now that I think of it, when I first approached them another lady did all the outstanding returns and penalties and then it was handed over to another lady that has been doing everything since then. There was probably a communication error between the two, the new lady didn't check what the other lady did or something and there was an oversight. Couple of years later and I get a surprise.

They even have the guts to tell me that if I am not happy with the service they deliver I am always welcome to go to another Accounting firm.

 

[RedViking]

So an Update:

I managed to get an appointment with the owner of the firm. They are terribly sorry for what happened, admit that there was an issue, but unfortunately is nothing they can do about it. I will just need to pay the outstanding year and penalties and they can't take responsibility for it. I guess that is it. Lesson learned.

 

[Kosmik]

So an Update:

I managed to get an appointment with the owner of the firm. They are terribly sorry for what happened, admit that there was an issue, but unfortunately is nothing they can do about it. I will just need to pay the outstanding year and penalties and they can't take responsibility for it. I guess that is it. Lesson learned.

Hardly. You can take them to court for the penalties if you choose, you just have to prove it. The tax you would have to pay either way.

 

[RedViking]

Hardly. You can take them to court for the penalties if you choose, you just have to prove it. The tax you would have to pay either way.

I can prove everything as I have the emails. I can go to court but think it will cost me more and too much time, so not worth it. The TAX I will have to pay anyways. SARS enjoy their interest and penalties though, flip.

 

[Kosmik]

I can prove everything as I have the emails. I can go to court but think it will cost me more and too much time, so not worth it. The TAX I will have to pay anyways. SARS enjoy their interest and penalties though, flip.

Small claims. You can charge to their maximum even if it's not the full amount. Cost would be like R200 and your time. I think max is R12k at the moment. You can claim the interest as well.