EVERY COMPANY is required to have a 'responsible officer' whose duty is to monitor compliance with tax rules and regulations.
A company that is liable to pay taxes, rates or duties collectible (hereinafter 'the taxes') must designate one of its officers as the responsible officer.
The responsible officer will be answerable for doing all acts in relation to the payment of the taxes and will also be responsible for paying the said taxes to the Collector of Taxes.
Where the responsible officer fails or neglects to carry out his/her duties, he/she will be jointly and severally liable together with the company for all taxes and any penalties in relation thereto. This means that the revenue authorities may bring an action against the responsible officer only, or against the company only, for the payment of any taxes/penalties due or the action may be brought against the responsible officer and the company jointly for the payment of the said taxes/penalties. This will be the case unless the responsible officer satisfies the Collector that:
"(a) there were bona fide reasons for the failure or neglect and that payment could not have been made in the circumstance; or
(b) he was overruled by the board of directors (hereinafter referred to as the board) or was otherwise prevented by the board or any director thereof from carrying out his duties..."
If the responsible officer satisfies the Collector that he/she was overruled or prevented as mentioned above, each director shall be jointly and severally liable (together with the company) for the taxes and any penalties in relation thereto. This will be the case unless the director proves that:
"(a) there were bona fide reasons for overruling the responsible officer or preventing payment and that payment could not have been made in the circumstances; or
(b) he was neither a party to the decision of the board to overrule the responsible officer nor a party to any action by the board or any other director to prevent payment." The responsible officer cannot be liable in respect of any taxes which were due and payable prior to the date of his designation or during any period when he/she is not the responsible officer.
The duties and obligations of a responsible officer are specific and demanding. He needs to comply with the statutory requirements to avoid personal liability.
Raphael E. Gordon is the managing partner of KPMG Peat Marwick, Past President of the Institute of Chartered Accountants of Jamaica, a member of the Public Accountancy Board, and Jamaica's representative on the Association of Chartered Certified Accountants International Assembly.
