Good Day,

My friend who is a sole proprietor usually send her income tax supporting documents to accounting company in Kepong to help her fill in the form and submit.

Last 2 year ago; she receive a call and letter from Income Tax on requesting her present to audit her files for year 2013 declaration.
To her surprise, her income tax had been wrongly declare. Her salary was not included in the declaration.

She confronted the accountant in charge and highlighted this issue where she was charge of RM 34K for the wrong declaration made. An additional 50% penalty from the amount needed to pay.
The only respond from the accountant in charge was "Sorry" and offer to bear half of the penalty from his own pocket.

Then last year, she was ask again to review her 2014 and 2015 files which was the same issue - repeated.
This time it was an additional 100% penalty!!!! Total of RM 40K!!

She confronted him again but this time he kept saying he did not notice and etc; and will bring up to his management on how to resolve the matters.
As time pass within a month; there was no reply was given and further on not answering her calls. Called his office but wrong information and case scenario was given to his office by him.

A complain email was send to the office with 2 reminder which only then, the management respond and willing to sit down to discuss the matters.

Instead of compensating the penalty for the mistake made by their staff; they offer my friend few years FREE service as compensation.

My friend was totally unhappy as they will not undertake the penalty and said the staff is no longer with them hence they cannot do anything.

My question is; where can we made a lodge proper complain to get the penalty compensation from this accounting company?
3 years of penalty from the mistake made by the accounting company is unfair to her.

Right now her name is listed in "Senarai Pembayaran Cukai Gagal Patuh (SPGP)" for the coming 2016 and 2017 declaration.

Please advice where can we get action on such malpractice and unprofessional services.

Thank you.

Norm is there is wrong filling, ypur friend should request change of audit person or even switch firm.

For the compensation, try contact MIA. You need to find who sign your submitted audit because the person is responsible..

better hired lawyer...for fast response..and also legal advice..

Should pay a bit more and find reputable firm la.

Your friend also wrong, 1st year already got issues why still continue use?

Rm40k including penalty... so the tax under paid i presumed is RM20k. And thts a lot of salary unde declare.... around RM100,000 maybe.

Your friend receiving such high salary i m suppose he pr she won’t be just a normal clerk must be some senior staff. He should at least check the tax computation. I think that s why we always sign on the tax computation. You dodnt check and you sign = gg! You cant blame no one but urself bru....

your friend didn’t realise that she was paying very low tax or thr income shown in the tax computation was too low?

I think your friend knew it was under declared but thought can get away with it. No one to blame but herself. She is responsible for her own taxes and accuracy of the tax comp. The firm merely assists to fill up the tax comp.

Might want to consider legal actions against the company. It doesnt matter who did it, it was done while the person was under the employment of the company, hence they are liable for any problems that crop up ( the tax form will have their stamp ). Approach a litigations lawyer to see if he can send them a letter of demand for compensation. Actual compensation which optimally includes all the reparations to be paid to LHDN, the legal fees and any losses incurred due to this, not that free service bullshit as those dont cost much at all.

i thought before they submit the tax form they will seat and discuss with you. Also my tax agent did highlight on the responsibility and the consequences of each unlawful deduction. My take is ur friend was excited with the low amount to pay and straight away give green light to submit.

Chamge to a better accounting firm la. Then prepare lawyer letter to old accounting firm. Meanwhile go ask the new accounting firm of they can help settle with income tax. Big4 all got these types of services to help you nego on tax payment. If you are making that much money don't skimp on the service fees. Sometime being Able to sleep at night more important.

Which accounting firm is this ? Need to avoid

Get a lawyer and sue the tax agent. Audit firm, tax agent usually have professional indemnity insurance, so can claim from insurance.

If your friend engaged capalang accounting firm with no proper tax agent just because they were cheap, then its his own problem and he has to bear the penalties himself.

In Malaysia, most SMEs don't give a shit about the quality of accounting & tax services, they only want cheap. This is what cheap price will get you.

The Form B has to be signed by your friend and naturally examined by her before doing that, before submission by the agent.

How is it she never spotted the omission, and the lower tax as well, then question the agent ?

You mean she signed blindly and passed back to the agent?

Anyway, 100 % penalty is absurd.

Although they can impose that under the law, in practice nobody does that.

What I did in one case was write a complaint to the tax division of the Finance Ministry (the Inland Revenue is under them), explaining the situation, reminding them that the Inland Revenue has never imposed 100 percent Section 113 (2) penalty in its history.

I submitted the relevant Assessment Notices to them by email.

The immediately directed the Inland Revenue to reduce the penalties to 50 percent.

Look up the staff directory of the Finance Ministry, look for senior officers under their Income Tax Division.

This post has been edited by Tham: Apr 9 2018, 11:04 PM

Dear All,

Thank you for the advise and comments.

The situation had become drastic; several letter from income tax was send to her home town instead of her mailing address which she usually correspond.

She receive a letter stating the penalty had increase from 40K to 46K (6K is the interest for late payment) and an additional letter of banning her from going oversea as she had not clear the due taxes.

Ultimately she when back to the accounting firm to pursuit the matters. The accounting firm GM was dodging her calls for a weeks till she step in their office and found out they (the reception) were lying to her of the GM unavailability.

She immediately told them her intention instead of legally suing the firm; she requested them to negotiate with Income Tax to reduce the penalty, request for installment and lift up the banned.

This morning she got a called from the firm stating they are unable to assist further and that the penalty will increase every 5% per month if the amount is not clear. Was like WTF!!! is there such clause?? I unable find it in anywhere of such clause that delay payment of penalty will subject to increment of monthly penalty.

FYI; she has pull out her files from the firm and has engage with another reputable accounting firm to check. The new accountant has briefly gone thru the files and notice the declaration of both year 2014 and 2015 has the same value breakdown which is different from the supporting document.

She confronted them why such situation occur and they only answer; "I'm sorry, I did not go thru you assessment once the staff completed the tabulation. We sign off to you for you submission. Plus, you had sign the assessment paper as well so we unable help you". She was totally shock and furious on this matter as all the years of service she trusted them to handle her account well. It is very unprofessional.

Hence, right now she in dilemma on the action to be taken now.
1st, how to stop income tax from imposing further interest (the accountant inform no further negotiation will be entertain and each delay will add 5% increment of the interest)
2nd, to lift the banned immediately; she need pay 50% 1st (might or might not lift the banned)
3rd, installment only can be made after she pay 50% (subject to income tax approval)
4th, which lawyer to engage to sue the accounting firm.

If anyone have a good lawyer which she can engage; please share.

Thank you.

This was her mistake coz she trusted them since they had been doing her account for several years till recent hiccups on 2013, 2014 and 2015.
She is worrying of her 2016 assessment now......

Not sure if it is a capalang firm coz this firm is advertising everywhere in the internet, FB and papers. The company was establish since 1996.

That what she thought would happen but not so; each years submission was always last minute prepare for her and no detail discussion was done other than informing how much she need pay to income tax.

She did ask before signing if everything is correct and appropriate as she too does not want any issue with income tax or running away from taxes.

Yet 3 years shit happens....

Ini kali lah,
Change tax agent

Buy Proton get Proton quality lor....Dont expect it is a merc.

Other than her salary which was miss out; there are issues on the declaration which are only entitle of 50% or 30% claimable as inform by the income tax officer.
a. Mobile Phone claims - 30%
b. General Expenses - 50%
c. Office Expenses - 50%
d. Allowance - 50%

The accountant declare all 100% on the above stated item hence all these area was penalize as well.
She gone back and check all the other years declaration; and it was done the same at 100% by the accounting firm.

After checking with income tax website; these was enforce since 2013.

So to my questions; why the accountant know it and still did not follow the rules apply??? She confronted them and got a reply, "It's ok, if they had found out we only need to resubmit again"............F!!

I think with her having to pay such high taxes every year means her income is high also, so its not a matter she cannot afford to pay the penalty now, its a matter she not willing to pay.

So my advice is, write in to LHDN or go to their office to discuss with the director on how to settle this. Propose to pay in installments if she cannot settle full sum in one go. At least stop the interest first.

For legal side of matters, I think a bit hard to win plus stand to lose even more on legal cost. For someone earning that much, quite hard to convince the judge that you don't know anything about income tax and you signed your income tax submission without checking.

I had PM you

She willing to pay the entitle taxes but not the penalty for the mistake made by the firm.

Plus, she was advised by the new accountant to lodge a complain to the Accounting Association in Malaysia once she start suing the firm as the association will help assist on this matter and might revoke the rights and the license of the charted accountant whom endorse her assessment. (which she intentionally do not want to go this far).

I would suggest to raise this up with MIA and Chartered Tax Insitute of malaysia. This is a very serious offense and every firm pays for indemnity insurance

Also, double check if there are even registered as a tax agent. There are a lot of bogus tax agents out there

This post has been edited by sikentut: Apr 13 2018, 12:05 PM

Were the assessments estimated ones under Section 90 (2) ?

Look at the top of the Assessment Notice. If so, Section 90 (2) will
be printed there.

These type of assessments are estimated or advance ones usually made by
the Inland Revenue when the taxpayer fails to file a return for the year.

Such assessments are easy to appeal and will usually be reduced once
you file a proper complete return.


Write to the Finance Ministry's tax division, as mentioned,
claiming error and mistake relief under Section 131.

Write to the top man here in the "Tax Division" here. CC to the two below him.

http://www.treasury.gov.my/index.php/en/co...-directory.html


Explain that you had made a genuine mistake in omitting
the income, as the form had been filled by the tax agent,
who never advised nor informed you of such omission.


Mention that it is not the IRD's practice to impose 100 % penalties.
Appeal to them to reduce or waive the penalties.

Scan copies of all assessments and attach them to your mail.


http://www.agc.gov.my/agcportal/uploads/fi...EN/Act%2053.pdf


Public Ruling No. 7 of 2015 here also explains this.

http://www.hasil.gov.my/pdf/pdfam/PR_7_2015.pdf



Look at the back of the Form B.

There is a section to be signed by the tax agent. This
was added in some years ago. Previously there was
no such section.

This means the tax agent is also liable by law.


Tax agents come under Section 153.

Explain in your appeal letter to the Finance Ministry that
the tax agent was negligent in his duties under Section 153
of the Act, and action should be taken against him for such
negligence.



This post has been edited by Tham: Apr 13 2018, 07:42 PM

Thanks for the additional information and the directory

really unprofessionals

Walao... the list of staff is all gone now....

Can pm me the accounting firm as well? This is terrible. I am sorry for you TS.

I really suggest to complain it to MIA and also hired a lawyer to sue the accounting firm.

Based on my experience and my practice, we will get the confirmation from the tax payer before we proceed for the submission of annual tax return (ATR) to the IRB..

We will prepare the tax computation with details, i.e. analysis of accounts and show any breakdown on the sensitive items.. So that tax payer will aware and review.. We will put a remarks if there is insufficient information, so that tax payer will need to provide the information or to confirm on the information given..

In our letter also got clause " we have prepared the tax computation based on the information given by the company and we have not undertaken an audit or conduct any verification on the completeness and accuracy information provided to us. We have to rely on your company to bring to our attention and particular disclosed which is incomplete or incorrect to that ATR"..

For the tax agent, our job scope is prepare the ATR based on the Auditors Report and information from the company.. However, the tax agent also need to advise to the tax payer on which sensitive items that need further information in order to determine the deductibility of the expenses..

After clients, confirm all in order, the tax payer need to sign on the confirmation letter (prepared by us) and the draft Form B, BE, C etc. if the tax payer agree..

Plus, in our appointment letter also already stated that the tax agent will not be liable for any penalty imposed by the IRB for any understated of information or wrong declaration..

From your cases,

Your friend
1. Your friend suppose to review all the tax computation before agreed and signed the Form.
2. Your friend suppose to ask everything even though not much knowledge on the taxation i.e. what income subject to tax or not, and what expenses subject to tax or not, any rebates or not, what is the tax rates
3. After tax agent submitted the ATR, your friend suppose to ask a copy of submitted form and review it again
4. Your friend suppose to deal with registered tax agent

Tax agent
1. tax agent responsible to explain the tax computation that he has prepared
2. if registered tax agent firm, there must be a preparer and reviewer before the tax computation is release to the tax payer / client
3. If you looking to non registered tax agent (means they prepare the tax computation using Tax Payer account) and not registered tax agent (using TAeF tax agent efiling), then your friend is in trouble..


Solution

If the IRB already issued the additional assessment and penalty, your friend is require to make a payment first before can appeal.. otherwise, penalty on late payment will be increase..

your friends may try to appeal, but need a strong supporting documents and explanation.

accounting firm has professional indemnity insurance

with that ammount, get lawyer to claim for you

can try this one, quite a reputable one

https://www.shearndelamore.com/

Usually will have insurance for mistake unless some scam accounting company.

Dear Aregip,

Thanks for the highlights; the Tax Agent is a reputable agency back then.
As pointed out by you; they did not explained the tax computation nor prepare in such details length as mention by you.
All was summarised and stated this is the amount need to be paid and informing everything had been arrange in order and ask my friend to sign it for submission.
Hence during the income tax interview with the officer; the Tax Agent who did the account were not able to answer the tabulation made and just nodding his head while replying will check it.

She had written the letter of appeal and will be meeting up the income tax officer soon.

Woww! Reputable tax agent, but not advise their client accordingly? Then, if like that, all i can say that tax agent will be liable for what they have done..

Suppose they need to prepare a set of tax computation to suppose the ATR.. Otherwise, how their key in into e-filing? Just simply key in? If they can not justify all thosw thing, then ask your friend to sue him and ask tax agent to bear all the cost..

Make sure compile all the evidence i.e. Supporting documents or any black and white documents..

May i know, your friends filing return is submitted under the tax agent (TAeF filing) or under your friends name? How to check, is by look at into submitted slip (1st page) and there is stated who submit your friend's ATR.. If tax agent, then you got 1 point to win..

Should pay lhdn first
LHDN vs Tax payer is unrelated to Tax payer vs Tax agent

Had visited the LHDN; the officer inform her files are no longer with them and had been pass to the "SO CALLED" blacklisted department and wait for appointment......

Will check on that; coz now all the files had been send to new accountant for review.

I thought all those can claim 100%? Entertainment only can claim 50%..

I am not accountant or tax agent

Everything is still there.

I have given you the link.

You do not know how to navigate?

can PM me the company name of the tax agent?

look back at the ea, see the firm got any caveat? and check what info you have provided to him/her, is the salary clearly stated there as well? i.e. u provided all the necessary info but they compute it wrongly?

by ea i mean engagement agreement ya

I need open in another explorer and it pop back up

Entertainment is very subjective, depending on yr nature of yr biz, who you entertained and sales income derived from it. Normally what we can clearly stated might not what LHDN approved expenses. So we have to be conservative and add back 50%.

This post has been edited by Iceman74: May 14 2018, 10:51 PM

What i dont understand is this

Mobile phone charges can claim 100% provided it is mainly use for biz.
how to prove that?
your biz card show that hp no. and you have other phone line for own use.
and try to be logic lar
example : if all your customers and suppliers are all local but your hp bill got oversea call, mana boleh ler

same goes with general and office expenses
if it really for office/biz use, can claim 100%
example : SSM renewal license, office cleaning and etc
toiletries and those expenses depending
try be logic,
example : no office or no employee but want to claim office cleaning and toiletries, sure cannot

Normally allowance are 100% claimable provided you must have the person detail eg full name and IC no.
(remember LHDN will cross check that person got declared your payment as income if the amount is substantial, if that person got declared and even the person are family related also no problem)

unless that allowance given are family related person and totally no relationship with your biz
example : give to your mom aged 70 years RM4000/month (no logic lar unless you can prove she can work and contribute to your profit equally)

meaning LHDN really digging into details

Yes cos normally a lot tax payers like to over claim or overstated it with personal expenses

This post has been edited by Iceman74: May 16 2018, 08:13 AM

I told you what to write, and who to write to,
and you or your friend should know how to search
on the net for the right site.

Search 'STAFF DIRECTORY FINANCE MINISTRY".

Then I even gave you the link, and you don't know
what to do. If it "pops back up" just try another way,
navigate around the site and turn off your popup blocker.

Do I need to spoonfeed every instruction ?


I found it immediately.

http://www.treasury.gov.my/index.php/en/co...-directory.html




Just pass my instructions to your friend and tell
him or her to follow up herself.

If she still does not know what to write, then just tell
to the LHDN, see the people on the 2nd Floor, Right Wing,
Block 8A, Government Complexes, Jalan Duta.


Or go to the respective floor where her file is located. Look
at the floor directory on the ground floor.

She can also try the Unit Audit Meja, I think it is on the 6th Floor.


Tell her to explain that she made a
GENUINE OMISSION UNDER SECTION 131.


Otherwise, tell her to go the Finance Ministry direct and
see the officers there.


Tax Division
Level 6, Block Tengah
Ministry of Finance Malaysia
No. 5 Persiaran Perdana Presint 2,
Federal Government Administrative Centre,
62592 WP PUTRAJAYA

Tell her to write a letter explaining the whole thing, that
she had made a genuine mistake in omitting the income
under Section 131 of the Income Tax Act, due to her belief
that her tax agent had included all her income in the Form B,
but in fact had not done so, nor did they inform her.


Look at the rules in the next section explaining her rights
to request for relief ( a reduction of the tax charged)
under Section 131.



This post has been edited by Tham: May 20 2018, 03:11 PM

Tell her to print this out and read it carefully, and also
show attach copy to her letter, and bring it along to the
Income Tax office, or the Finance Ministry office, to show them.









12. Review of Assessment Through Application for Relief

12.1 In Respect of Error or Mistake Under Section 131 of the ITA
(Income Tax Act 1967)

12.1.1 Apart from an appeal under section 99 of the ITA, a taxpayer may make an application for relief under section 131 of the ITA in respect of error or mistake in the ITRF made by him. The determination whether a taxpayer has made an error or mistake is a question of fact and law.




12.1.5
Some examples of error or mistake made in the ITRF are:

(a) total income reported in the income column;

(b) income for the previous year of assessment is reported in the current year of assessment;

© forgot to claim relief under sections 45 to 49 of the ITA such as insurance, children, books, housing loan interest, etc; or

(d) did not claim deductions such as zakat, approved donations, levy and so on.



12.1.6
The onus of proving that there is an error or mistake shall be on the taxpayer. The DGIR will review the assessment only if he is satisfied that the taxpayer has made an error or mistake in the ITRF or statement made by him for the purposes of the ITA which is furnished to the DGIR.



13. Application for Relief Procedure

13.1 An application for relief can be made either by a letter
or Form CP15C by stating the reasons in detail relating the application.

13.2 In the event of the letter of Form CP15C do not filled in with the correct details, the application shall be returned to the taxpayer to enable the taxpayer to submit a new application.



13.3 If the application for relief is approved by the DGIR, the assessment will be amended and a reduced assessment will be issued.

13.4 If the application for relief is rejected by the DGIR, a rejection letter together with the grounds of rejection will be issued to the taxpayer.

13.5 If the taxpayer disagree with the decision, he may request via a letter to the DGIR to send the application for relief (which was submitted earlier to the SCIT) within six (6) months from the date of the rejection. The DGIR shall forward the application to the SCIT within three (3) months from the date of receipt of the request.



The SCIT is the Special Commissioners of Income Tax. If the
income tax or Finance Ministry people rejects her application,
she can still make a final appeal to this body.

The Special Commissioners is under the Finance Ministry. Their decision is final.


This post has been edited by Tham: May 20 2018, 03:17 PM

Since you do not seem to know what to do,
tell your friend to come to this thread here.


I am not sure if she can appeal direct to the Special Commissioners
straight away without dealing with the Tax Dept first,
but she might as well go ahead and try.


Download Forms Q and N.

Form Q
- Appeal to the Special Commissioners to review your assessments,
reduce the tax and penalties charged.

http://www.hasil.gov.my/pdf/pdfborang/CP14_Pin2009_2.pdf


Form N
- Application for extension of time to file this appeal.
(Technically, you were supposed to have filed the above
appeal within 30 days from the notices of assessment.)

http://www.hasil.gov.my/pdf/pdfborang/CP15_Pin2009_2.pdf



Fill in both forms.

On Form Q, state the reason for your appeal to reduce the tax
and 100 % penalties in the small space. If there is not enough
space, type "As given in the attachment", and type the reasons
on a new sheet of paper to attach behind.



Send all the forms by registered post to the Chairman below. Attach
copies of your three Notices of Assessments there, together
with the Penalty Notices.

Since there is more than one year, fill in a separate form for 2013, 2014 and 2015.




Puan Noorlizah Binti Saaban
Chairman
Special Commissioners of Income Tax
Aras 1 Blok Selatan
Kompleks Kementerian Kewangan
No. 5 Persiaran Perdana
Presint 2, Pusat Pentadbiran
Kerajaan Persekutuan
62592 WP Putrajaya

Email : Noorlizah.Saaban@treasury.gov.my




Tell her to read this as well.

https://www.hasilnet.org.my/information-on-...ome-tax-appeal/



This post has been edited by Tham: May 30 2018, 05:45 PM