How to use the services of a Tax Consultant.

By Patrick M. Omony

Engaging a tax consultant for his services can be a daunting and nerve-racking experience, filled with intrigue for both the client and the Tax consultant. The client on one side, wants to get the best service and at the right cost, while the Tax consultant wants to be equitably compensated for his service.

I would like through this article, to clarify a few things that should enable the client and Tax consultant have a good interactive experience.

It is suffice to say, that Tax is an integral part of life, which a consultant can help a client to deal with or develop innovative strategies to address the complexities in it.

Tax professionals recognize, on one hand the fact that most taxpayers are not familiar with the intricate of tax laws, and therefore need to be assisted in complying. They guide taxpayers on how to comply with their tax obligations which may be complicated for an ordinary business person.

What Does a Tax consultant do?

A tax consultant offers the service of preparation and filing of tax returns or other documentation required by the Uganda Revenue Authority or relating to a right or obligation in the tax laws for a client including request for opinions, rulings, refunds, reviews, settlement arrangements and making objections as well as offering advisory service of the same.

They help tax payers tackle tax assessments with the aim of eliminating or obtaining a fair position for the taxpayer. Tax consultants proceed to engage the Tax man after understanding the position of the client and that of the tax Authority. Tax payers have often had their objections and appeals rejected and assessment upheld for failure to present substantial or lawful defense to simple tax assessments. A tax consultant generates defense points of reasoning after reviewing a client’s actions that have resulted into an assessment, and combs through tax laws, URA’s publications and rulings to raise valid points to support the reasons to successfully object to an assessment or appeal.

Caution on choice of consultant

Many incidences have been reported, of poor work by qualified tax consultants, where a consultant mishandled a client’s tax matter leading him/her(client) into serious tax debt or in some cases caused them to miss tax credit opportunities and waivers that they were due for. Tax incentive opportunities give businesses, mileage in much needed cash-flow, through tax-refund, exemptions or offsets. It is vitally important to note at this point, that matching a consultant with your tax needs is crucial.

These are some of the red flags that should help a client identifying the right consultant. Any consultant that promises a drastic reduction of a customer's taxes without first getting a detailed case background is likely going to end up being a scam. A consultant who will not inquire of a customer the nature of his/her business and why he or she owes the tax authority money is not conducting the full due diligence process that would be required for developing a proper engagement strategy against the Tax Authorities on a tax matter.

Tax Consultants have often branded themselves by specializing in industries such as filming, manufacturing, agriculture, real-estate, retail etc… or certain undertaking such as acquisitions, mergers, Asset transfer and disposals while others specialize in small businesses like SMEs and personal tax. They are respectively more cut out to offer Tax compliancy and advisory services in those areas. A tax consultant who is familiar with the tax payer’s industry or business and all its intricate transactions would offer better service. It is therefore incumbent upon the client to, before hire, interview a prospective Tax consultant with the aim of establishing what he/she knows about his industry and business. Tax consultants and firms in an effort to offer better service, teamed up with business development experts who are able to weigh-in in understanding the client.

How to engage

After a client has zeroed on a particular consultant, the next stage is to establish the terms of hire. A Tax consultant can be hired on an ad-hoc or a retainer contract the basis of which, the consultancy cost and fees are structured. The ad-hoc contract is when you chose to engage a consultant for a particular tax matter and that’s it. It is most recommended for one offs such as handling particular Tax assessment/Assessments, whereas the retainer contract is most preferred for long term relationship such as continuous advisory. However the most recommended for a business or organization is a hybrid contract.

A hybrid contract is where an enterprise contracts a consultant to file returns as well as offer advisory service on a ad-hoc basis. Care must be taken by the client to ensure that the consultant does not feel cheated as this will not motivate him to be committed. Clients have often been known to cleverly sneak in tax work to be done at no fees in such contracts.

To address this concern, a provision in the contract should cater for re-reimbursement of additional fees and costs to cater for such uncertainties since the course of direction, duration and intensity of engagement with Tax Authorities on a tax matter is very unpredictable.

Pricing options

Some examples of the new value based pricing concepts include basing prices on a percentage (10-20 percent) of savings achieved. A consultant may offer a fixed or total price upfront to avoid any potential surprises to the client and; so that customers can compare value to price before they agree to purchase the service. Offering several levels of service packages and different pricing options for each package and Providing a service guarantee whereby clients are eligible for total or partial reimbursement of the fees paid if they are not completely satisfied with the service can also be considered.

With this information, a client should be enlightened enough to be able to structure a win-win confortable engagement with a preferred consultant.

Engaging third parties

 For those that might not feel confident enough to strike a good contract with a consultant, can engage a business development expert at a modest fee for his time to help vet a consultant. Word of caution though, they should do the due diligence to prevent conflict of interest.

Finally when objecting to assessments, appealing or undergoing a Tax Audit, clients should be prepared for an extensive financial analysis and bureaucratic process that may stretch out for months.

The writer is a Business Development, Audit and Tax Consultant and the

C.E.O and Founder of Omony Consulting Co. Ltd

jwauditors@gmail.com