When you run a business, dealing with finances can be a major task. Tax lawyers and accountants are the two kinds of professionals who help you deal with the nitty-gritties of accounting and tax procedures. But there are times when it might become difficult to decide whether you should approach an accountant or a tax lawyer for a particular financial problem. There are some situations that only a tax lawyer can deal with and some others that are purely an accountant’s forte. Today, we will discuss three scenarios where you would need to take legal help:
1) When There is A Voluntary Disclosure Program (VDP)
According to the Federal website, a Voluntary Disclosure Program (VDP) is a legal process that gives you a second chance to alter or correct a tax return you previously filed or to file a return you were supposed to file earlier. So, it is a legal process and not a tax accounting one. If at any point in time a problem arises, only a tax lawyer will be able to represent you as they enjoy the solicitor-client privilege. This means, if your accountant tries to file your company documents for the VDP, there is a high chance that the CRA might restrict you from participating in the process as they may consider you to be non-compliant. Many companies resort to the VDP to avoid paying their fair share of taxes. Hence, you would need legal help while filing under a VDP.
2) When There is A Canada Revenue Agency (CRA) Tax Audit
Usually, when there is an audit by the Canada Revenue Agency, you would need both a tax lawyer as well as an accountant. If the issue is about the proof of documentation to support the expenses claimed, then the accountant is usually in a position to provide that audit evidence to CRA in a cost-effective way. The accountant will prepare the financial statements and take care of the bookkeeping. It is no doubt one of the most common tasks that an accountant has to perform. However, if the issue involves legal tax interpretation or possible civil penalties, then a tax lawyer will be needed.
3) While Performing Tax Planning
It might seem that all you need is an accountant during your tax planning but in reality, you will require a legal expert to tell you if your planning strategies are aggressive or realistic. Tax laws keep changing from time to time. And a lawyer will be able to enlighten you about the laws pertaining to taxation in Canada and their respective amendments. Hence, it is imperative to consult with a tax lawyer while doing tax planning.
Of course, you will need an experienced tax lawyer for tax litigation purposes. So, if you have been considering hiring a tax lawyer for your firm, then reach out to us at the earliest.