Use these six good business practices to minimise your risk of personal liability for your company's tax debt
Are you the financial manager, bookkeeper or accountant in your company? Under the Tax Admin Act, you're now personally liable for your company's tax debt. Read on to discover six good business practices to minimise your risk of personal liability so you don't end up in jail for someone else's mistake.
As the representative taxpayer of your company you're personally liable if SARS detects any transgressions.
That's right, in terms of the Tax Admin Act, 'anyone who's responsible for paying the tax liability of another person or company and is nominated at SARS as the representative person will be held personally liable for someone else's tax debt,' explains Practical Vat Loose Leaf Service.
Luckily you can reduce your risk of personal liability if you adhere to good business practices.
Here are the six good business practices you can use to minimise your risk of personal liability
Make sure you've got everything you need before you submit the return. For example, compare the current month's return with a prior month and follow up on variances. 'In some cases, SARS can only hold a representative taxpayer liable if he's negligent or fraudulent in dealing with taxes,' says the Loose Leaf. So make sure you're careful when you compile information and documenting. It'll help protect you.
If you know an error's been made in previous returns by someone else, try correcting the error. Don't just keep quiet because the error wasn't made by you. If SARS proves you knew about it, you can be held responsible because you were negligent. You can register for the Voluntary Disclosure Program (VDP) and re-submit the previous returns. SARS won't impose penalties and will charge you very little interest. This'll protect you from additional liability.
Don't be misleading when you prepare tax returns or deal with SARS. SARS will flag you for an audit and investigation.
Don't perform any work for a third party if you know it's dishonest.
If you don't understand something, get advice and ask more questions.
Set up a reminder system to ensure you submit and file your company's returns on time.
Remember, it's much better to have a good reputation than to have lots of money obtained dishonestly.
Use these good business practices to minimise your risk of personal liability for your company's tax debt.