Delegation does not eliminate personal responsibility

In a judgment in the names Bonello vs Debono, delivered by the Court of Appeal, the court gave a practical reminder on the limits of delegating tax affairs to a professional.

The case involved a taxpayer who had left Malta and, for a time, was no longer closely following his tax and VAT affairs and decided to engage a practitioner to assist him with these filings. The practitioner would take care of the necessary tax and VAT filings, and the taxpayer would avoid further issues with penalties and pending returns.

The taxpayer later claimed that a particular tax return had never been filed and that certain VAT returns had either been filed late or not dealt with properly. As a result, he had to pay penalties and other amounts which, in his view, were caused by the practitioner’s failure to carry out the work properly.

The practitioner strongly denied those claims. His position was that he had done the work he was engaged to do and that the relevant tax returns had been prepared and submitted together during the period of his engagement. He also produced evidence in support of his position, including documentation relating to the returns and payment made directly to the tax authorities at the relevant time. In short, the practitioner’s defence was not simply that the taxpayer remained responsible, but that he had in fact carried out the work.

The taxpayer sued the practitioner before the Small Claims Tribunal, claiming €924. This amount represented a mixture of fees which he said had been paid without proper benefit, together with penalties and charges which he argued resulted from the practitioner’s mistakes.

The practitioner denied liability. Apart from insisting that the filings had been dealt with, he argued that any delays or penalties were not caused by him. He also maintained that, in some instances, the taxpayer had failed to provide the necessary information in time, or had later taken back control of his own tax affairs.

The Small Claims Tribunal rejected the taxpayer’s claim. The taxpayer then appealed.

The Court of Appeal accepted that the practitioner had been engaged to assist with tax and VAT matters, but that did not automatically mean he was responsible for every later problem, penalty or missing document.

A key point was that correspondence from the tax authorities was still being sent to the taxpayer, not directly to the practitioner. The court considered that the taxpayer therefore still had a role to play. He had to remain alert, check what was being received, and make sure that filings and receipts were in order.

On the disputed tax return, the court was not convinced that the practitioner had negligently left out one particular return, especially when several years’ returns had been handled together. The court also noted that the taxpayer did not properly challenge or seek remission of the €500 penalty before trying to recover it from the practitioner.

The VAT issues were also decided against the taxpayer. In one instance, the court accepted that the practitioner had been chasing the taxpayer for information near the deadline. In another, the deadline fell after the taxpayer disengaged the practitioner and indicated that he could take care of his own tax affairs.

The appeal was therefore dismissed.

The lesson is simple. Hiring a practitioner is sensible, especially when one’s affairs are complicated, delayed, or being managed from abroad. But professional assistance is not a magic shield. A client should still keep copies, check receipts, monitor correspondence, reply promptly to requests for information, and object to penalties where appropriate—delegation does not eliminate personal responsibility.