Tax consultancy in South Africa

The term “tax consultant” is marred by ambiguity. What does a tax consultant do and what type of professionals are they?

One of the many reasons why the term is not entirely clear is because the tax profession is a function of different professional disciplines/areas of expertise. All in all, though, these can be broken down into two broad categories:

• Finance
• Law

starting point then, a tax consultant is typically someone who works or has a background in law or finance or a combination thereof.

Another reason for the ambiguity associated with the term “tax consultant” is that you get different types of tax consultants. These can also be broken down into two broad categories:

• Tax compliance consultants
• Tax advisory consultants

Tax compliance consultants typically assist taxpayers with the completion and submission of taxpayers’ tax returns. Their work is often concerned with giving practical effect to tax law by completing tax returns.

Tax consultants who are “tax compliance consultants” are often (but not always) more closely affiliated with the finance industry than with the legal industry.

Tax advisory consultants, on the other hand, typically advise taxpayers about tax law. Their work is often less concerned with filing tax returns and more with advising taxpayers about tax law.

Tax consultants who are advisory consultants are typically more closely affiliated with the legal industry. I am not suggesting they are all lawyers, only that the nature of their work is ultimately concerned with the interpretation of tax law.

Of course, you get tax consultants who are both compliance consultants and advisory consultants (let’s call them “hybrid tax consultants”) but you will find, more often than not, that even the hybrid tax consultants will lean more towards either advisory or compliance.

So now that you  know roughly what the typical background is of a tax consultant and that you get different types of tax consultants, it’s important to also know that each type often has certain niches within which they operate.

Tax consultants who are compliance consultants would typically focus either more on assisting with tax returns associated with individuals or more on assisting corporates with their tax returns. Hence the popular titles, “Individual Tax Compliance Consultant” and “Corporate Tax Compliance Consultant”.  The same principle typically also applies to advisory consultants with popular titles such as “corporate tax consultant” or “individual tax consultant”. For some tax consultants, these niches can be broken down further into specialty areas such as tax dispute resolution, VAT, transfer pricing, tax incentives, employees’ taxes etc.

Since most tax consultants in some way operate within either the legal or finance industry, some tax consultants work in tax as a consequence of the environment they work in. Stated differently, tax work is a by-product of their larger functions.

Now to the “level” of tax consultant. Levels (for lack of a better word) in this context refer to the complexity of tax work that a tax consultant does or is willing to take on. In the world of tax, there are very few “simple” issues.  While complexity is, to a large extent, a subjective concept, it is fair to say that certain things are, objectively considered, complicated. Complexity in the world of the tax profession can refer to either legal complexity (in that the applicable tax law is complicated) or factual complexity (the facts of the issue is complicated) or both legal and factual complexity.

The South African Institute of Tax Professionals (SAIT), South Africa’s largest controlling body for tax professionals, according to their website, conveniently sets out different designations for different tax consultants ranging from what could perhaps be described as “entry level” tax consultants to more sophisticated tax consultants. These are, in order from entry-level to highest level:

• Tax Technician
• General Tax Advisor/Tax Advisor
• Chartered Tax Advisor (SA).

Tax consultants who are tax technicians tend to be involved in tax as a consequence of the broader (finance or legal) work they do and are often compliance consultants.

General Tax Advisors, typically, also do  tax as a by-product of the larger finance and/or legal industry in which they operate (to a lesser extent though, than Tax Technicians) and do either tax compliance and/or advisory at an advanced level.

Chartered tax advisors, on the other hand, are typically tax-exclusive tax consultants, most experienced finance and/or law professionals who deal with tax on a highly sophisticated level.

So then, in conclusion: a tax consultant is typically someone within the larger finance or legal industry, that either does tax compliance or tax advisory (or both), either as a by-product of their main work at a lower level of complexity or as their main work at an advanced/sophisticated level of complexity.

Unicus Tax Specialists SA is a tax-exclusive advisory firm, founded by Nico Theron, a Chartered Tax Advisor (SA). The firm specialises in tax dispute resolution and Voluntary Disclosure Program applications. In both its niche areas of expertise, Unicus Tax has always, at the time of writing, been able to achieve satisfactory outcomes for its clients.

Also read: What you need to know about provisional tax