Warning over new ‘ghost’ tax scam in South Africa

Tax experts have warned taxpayers over a new ‘ghost consultant’ tax scam, where bogus tax practitioners are leaving clients high and dry – sometimes with money still owed to SARS.

The scam was flagged this month, where unscrupulous tax practitioners – hired to handle a client’s tax affairs – instead just take their money and then up and disappear.

Clients only realise something is wrong when they try to get hold of a tax clearing certificate or find out that SARS is taking money out of their bank accounts to cover tax debts owed.

Keith Engel, CEO of the SA Institute of Taxation (SAIT) told the City Press that these scammers also raise other red flags, often promising clients guaranteed tax returns from SARS.

“Many of what we call ‘ghost’ tax preparers promise refunds, charge a fee and then disappear. If Sars then audits the taxpayers’ cases, they demand that the money be repaid. The taxpayer can also incur penalties,” he said.

Making matters worse, taxpayers are held fully responsible for this – meaning using a dodgy tax practitioner is no excuse.

“If you use a bad tax practitioner, SARS has placed you on notice for the risks you take. It states the importance of being fully compliant because, as a taxpayer, your tax affairs ultimately remain your own responsibility,” Tax Consulting SA said.

With the 2024 Tax Filing Season upon us, South African taxpayers who want to do the right thing, face rising concern over non-compliant tax practitioners whose actions can spring nasty and costly surprises on unsuspecting taxpayers.

In official correspondence in July, SARS warned South African taxpayers and tax practitioners that non-compliance among the latter is in the crosshairs.

SARS Commissioner Edward Kieswetter posed the question: if your tax practitioner’s own taxes are not compliant, how can the practitioner be competent to ensure your compliance and to keep your tax affairs in order?

Tax Consulting said that South African taxpayers who rely on dodgy practitioners often find themselves in legal trouble and owe a lot of money to SARS.

It suggested that taxpayers not be lax about their tax affairs and assume that they can be hands-off, even with tax practitioners involved.

“Now, more than ever, it is advisable to proactively verify credentials and compliance before appointing a tax practitioner. This will ensure you work with professionals who adhere to the required standards.

“Look for tools and resources to verify your compliance status and that of your practitioner. Utilizing these tools can provide the assurance needed to navigate this critical period with confidence.”

Practical Steps for Taxpayers

1. Check Registration: Ensure that you and your tax practitioner are registered with SARS and the practitioner with a recognized controlling body, and that they show they are in good standing.
2. Request Proof of Compliance: Ask your practitioner to provide evidence of your and their overall compliance status.
3. Use Verification Tools: Leverage tools and resources to verify your compliance status and that of your practitioner.

South Africa’s banks and SARS have been warning taxpayers to be on high alert for a host of tax-related scams.

With tax season 2024 in full swing, the risk of falling victim to scams is higher, especially those that are spoofing communication from banks and the revenue service.

Tax season has become a popular time for criminals to send out fraudulent emails and SMSs claiming to be from the South African Revenue Service (SARS), engaging in phishing and social engineering scams.

Messages and communications sent to victims can often appear above board, coming from addresses such as [email protected] or [email protected], and often claim that the recipient is due a tax refund or owes money to SARS.

Messages also typically feature links to fake forms and websites that mimic the official SARS site to get taxpayers to provide personal information to make payments.

Taxpayers are urged to remain vigilant and proactively take charge of their tax affairs to avoid falling victim.

Read: Big Shein and Temu tax changes hit South Africa next month