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Information and Documentation Requested From Designated Persons in Respect of Taxpayers Under Investigation

Article 14(3):New Provisions:Request for information from designated persons.

1. Who is a Designated Person?

   A designated person is any person who may be acting as mandatory, nominee, trustee, agent, depository, custodian, under a contract of work or otherwise, irrespective of whether such person is in actual possession of authorisations or is exempt from requiring such authorisations under any law or is acting in breach of law when holding such property without authorisation required to do so by applicable law.

   A designated person includes any of the following:

   • a person who is in possession of a valid licence issued in terms of the Banking Act; or
   • a person who is licensed in terms of the Investment Services Act; or
   • a person who is authorized in terms of the Insurance Business Act or enrolled in the Brokers List under the Insurance Brokers and Other Intermediaries Act; or
   • a person who is authorised under the Trusts and Trustees Act to act as a trustee or as an administrator of any private foundation; or
   • advocates, notaries, legal procurators, accountants, auditors and other persons holding warrants to exercise a profession

2. When can the Commissioner request information from designated persons?

   The Commissioner may request information from designated persons if

   1. The taxpayer has been informed that he will be audited, and
   2. A request for information has been made directly to him in accordance with the provisions of sub-articles (1) and (2) of article 14 of the Income Tax Management Act, and
   3. After considering available information and explanations presented by the taxpayer there exist reasonable grounds to suspect that tax has been, is, or may be evaded.

3. What constitutes reasonable grounds of suspicion?

   Reasonable grounds on the part of the Commissioner to suspect that tax has been, is or may be evaded by any person shall include but not be limited to the following:

   • a refusal by that person to provide the Commissioner with any documentation or information as may have been requested from him by the Commissioner in relation to any property which he owns, possesses, or holds at that time through another person including designated persons, or any property previously owned, possessed or held and subsequently disposed of under any title whatsoever by such person at an earlier date;
   • where a notice in terms of article 29 of the Income Tax Management Act, is not made as the taxpayer could not be found or for other reasons attributable to the taxpayer, and in accordance with the said article 29, the Commissioner publishes a notice in the Gazette and in one or more daily newspapers stating that a notice has been made and inviting the taxpayer to call for it at the Department;
   • where, after being requested by the Commissioner by means of a notice in writing, such person fails to produce without any reasonable excuse any books, records, documents, accounts, electronic data and a correct statement referred to in article 14(2) of the Income Tax Management Act within thirty days from the date of service of such notice;
   • such person gives any false answer, whether verbally or in writing, to any question or request for information asked or made in accordance with the provisions of the Income Tax Acts;
   • such person prepares or maintains any false books of account or other records or falsifies any books of account or records.

4. What information should be submitted by a designated person?

   A designated person who receives such notice is required to provide the Commissioner, within the time indicated in such notice not being less than thirty days from the date of service of such notice, with:

   1. all such information and documentation which he may have relating to property of any kind or description, transferred or delivered to him by the taxpayer, and
   2. owned, possessed, or held by the designated person under any title on behalf of or for the benefit of the taxpayer, on the date of the said notice or during the period specified in such notice not commencing earlier than six years from the date of such notice, and
   3. any property transferred or delivered to the designated person and is no longer held by the designated person or has been converted into a different form of property or has increased or decreased in value or extent or has been transferred to another designated person.

   The term "property" means property of any kind or description, whether movable or immovable, personal or real, and wherever situated, and in relation to rights and interests whether vested, contingent, voidable or future, and including any money, investments, and amounts in savings, loan and other bank accounts (whether fixed, overdraft, current, deposit, or otherwise, and whether business or private accounts);

5. Is there any Information which a designated person has no obligation to provide?

   The designated person shall not be bound to provide information to the Commissioner in respect of:

   1. any beneficiaries, (other than the person being investigated i.e. in respect of which the notice has been issued), for whose benefit the property may be held or the terms and conditions under which it is so held.
   2. any property transferred or delivered to the designated person held on a temporary basis or as a simple administrator for the purpose of a transaction and has been returned to the person who is being investigated.

6. Are designated persons exonerated from Confidentiality and professional secrecy obligations?

   Any designated person who receives such notice shall provide the Commissioner with the information requested in the notice and this notwithstanding anything to the contrary in the Income Tax Acts, any provision of the Professional Secrecy Act, any obligation of secrecy or confidentiality, or to any other restriction relating to the disclosure of information whether arising from a provision of law or any agreement or other arrangement.

7. What are the Limitations on the use of information obtained by the CIR:

   The Commissioner shall keep confidential any information provided to him by the designated person and shall not disclose such information to any other person except where the Commissioner is bound at law to effect such disclosure or where he requires to use such information in the context of proceedings under this Act.

   Any information obtained by the Commissioner shall be used by him solely for the purpose of the investigation being carried out by the Commissioner as to whether tax has been, is, or may be evaded by the relevant person being investigated and, or any related proceedings under this Act.

8. What kind of information would the CIR require?

   The Commissioner shall specify in a notice issued under this article what information he requires and whether with reference to the property held on the date of the notice and/or at any point during a period of time (not commencing earlier than six years from the date of such notice).

9. What happens if the designated person has no information to report?

   If the designated person in receipt of a notice:

   1. has not held any property which was transferred or delivered (whether directly or indirectly through a transaction or a number of transactions which the designated person is aware of) to the designated person or vested in such designated person by the person in respect of whom notice has been given by the Commissioner to the designated person in terms of sub-article 3(a) of this article; or
   2. holds or has held the afore-said property on a temporary basis or as a simple administrator; or
   3. has returned the afore-said property to the person in respect of whom notice has been given by the Commissioner to the designated person in terms of sub-article 3(a) of this article;

   he shall inform the Commissioner accordingly and shall have no further obligations in this regard unless the Commissioner seeks further information specifically on such circumstances.

10. Will the CIR inform the taxpayer under audit of such notice?

    Where a notice has been given by the Commissioner to a designated person he shall, within fifteen days of issue of such notice, inform by a further notice in writing the person in respect of whom such notice was given, that he has issued a notice under this article.

11. Can a designated person inform his customer of such notice?

    Any designated person in receipt of any such notice may inform his customer, principal or other person who may have delivered, settled, donated or otherwise transferred property to the designated person of the receipt of such notice and his response thereto.

12. What happens in case of non- compliance by designated persons?

    The Commissioner may report any act or failure by the designated person to the relevant regulatory authority which issued a licence or authorization to such designated person.

    Where a designated person gives any false, misleading or incorrect information in relation to a notice issued under this sub-article he shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than ten thousand euro (10,000) and not exceeding twenty-three thousand euro (23,000).