Can you receive penalties for an error from your tax advice?

Freelancers and companies leave the administrative procedures in the hands of a tax consultancy, we will see if they are responsible after an error by their manager or advisor.

It is quite common, that freelancers and SMEs outsource services such as tax, labor and accounting advice for their businesses. In addition, bureaucracy, paperwork and the obligations of a business linked to organizations, are some of the thorniest areas in terms of managing a business.

Especially because of the importance and possible impact of these steps on the business and on the entrepreneur’s headaches, if they are not managed in the correct way

For the advice to be able to fulfill its obligations correctly, for example, for the preparation of the relevant tax returns and declarations, it is essential that the advisor has access to all the data and information that affect the act.

In the event that the latter does not have, at the time of carrying out the procedures, the necessary or relevant data or documentation, it is impossible that, even applying the greatest possible diligence, the assignment can be carried out adequately and in accordance with the law.

Just as there are consultancies with great professionals, we also find some that make us doubt their good work. As might be expected, due to the lack of knowledge, experience and professionalism, mistakes come by themselves. But should the customer bear the consequences?

Are you responsible for an error in your tax advice?

An error in administrative management as a company or self-employed person can lead to a fine or financial sanction, often accompanied by default interest. However, depending on the type of error, it may or may not be attributed to tax advice.

In order for the responsibility to fall on the tax advice, it must be a mistake made by the adviser through negligence.

In addition, only the payments required from the taxpayer (company or self-employed that hires the consultant’s services) that imply damage and are caused by the performance of the consultancy are established as grounds for compensation.

Example of civil liability of a tax consultancy

Due to the particularities of the activity, most tax consultancies have civil liability insurance. Besides giving us security, it also offers it to the clients if they make a negligent mistake like the following:-

Interest on late payment or penalty for a tax not paid on time as a result of an oversight by the advisor.

Let’s imagine that the advisor forgets that a new self-employed person must file personal income tax returns in the first year of activity. After an inspection, they demand the payment of these declarations together with a fine; the difference between what he had to pay and what was actually declared is the responsibility of the advisor.

If you are in a similar case and you have to take sanctions due to an error by your advisor, it is time to change. You need to contact the best tax law firms in Delhi to get tax, accounting and legal advice.

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