I am having trouble, and was hoping someone could help me.
One of my clients' previous tax practitioner submitted named client's 2011 income tax return in February (Sole Prop - thus late). The correct assessment was then issued, stating that the client owes SARS nothing. SARS then requested supporting documentation. The tax practitioner did not submit any supporting documentation, not even after the final demand letter that allows an additional 21 days.
In July, the client wanted to apply for a tax clearance, so I phoned to find out what is still outstanding. What a shocker! There was VAT outstanding of R40000 for a period in which insufficient evidence was submitted for the audit (should have been R700), there were 2 EMP201's outstanding, as well as credits and old returns unpaid. Last, but not least, SARS assessed the client for R140000 on the abovementioned return!
This is not the worst. In September, SARS took R60000 out of the business's bank account, and a few weeks later, R30000. For a small business like that, this can mean the end of it!
Take into consideration that the client is also losing business from the local municipality, as he cannot receive a tax clearance.
The client decided to take legal steps. The attorney had an interview with the previous tax practitioner last week. He is adamant that he is not going to pay anything, as he delivered these services for free! The client denies that services were not paid for.
So here is my question:
Can a tax practitioner/accountant not be held liable for negligent actions if no fee were charged?
And also, is there any way for me to force him to provide me with his previous year's workpapers in order to proceed with 2012's financials? NB: He is not registered with SAIPA or SAICA or any professional body.
Hope you guys can help!