Does appointing your practice move the liability? Who the FTA penalises when a client files late

It is the question a practice gets asked by a client at onboarding, and the question it asks itself at two in the morning when a return has gone in late. If the client appointed us, whose penalty is it?

The UAE answers this directly, in the Tax Procedures Law rather than in the Corporate Tax Law, and the answer is more specific than either party usually assumes. This page quotes the provisions. It is not legal or tax advice; Federal Decree-Law No. 28 of 2022, Federal Decree-Law No. 47 of 2022, the Executive Regulation in Cabinet Decision No. 74 of 2023 and the FTA control.

1. The appointment is expressly without prejudice to the client

Article 14(1) of Federal Decree-Law No. 28 of 2022 says a Person may appoint a Tax Agent to act in his name and on his behalf with regard to his tax affairs under the Decree-Law or the Tax Law, and then adds eight words that decide the whole question: without prejudice to that Person's responsibility under the Decree-Law or the Tax Law.

The Corporate Tax side says the same thing from the other direction. Every Taxable Person shall prepare and submit the Tax Return and settle any Payable Tax within the timeframes specified, and every Taxable Person is responsible for the accuracy of the information and data in the Tax Return and any correspondence with the Authority (Article 8(1) and 8(3) of Federal Decree-Law No. 28 of 2022).

So appointing a practice adds a party. It does not subtract one. The client remains the person the obligation attaches to, which is why a practice cannot offer a client relief from a penalty by taking the engagement, and should not imply in an engagement letter that it has.

2. The violations list names who pays, line by line

Article 24(1) of Federal Decree-Law No. 28 of 2022 requires the Authority to issue an Administrative Penalties Assessment and notify the Person within five Business Days for a listed set of violations. The list is worth reading as a practice, because it names its subject each time.

The ones a practice meets weekly name the client:

• failing to keep the required records and other information (paragraph a)
• failing to submit records and documents related to tax in Arabic when requested (paragraph b)
• the Taxable Person failing to submit a Tax Registration application in time (paragraph c)
• the Registrant failing to submit a deregistration application in time (paragraph d)
• the Registrant failing to inform the Authority of a change requiring amendment of its tax record (paragraph e)
• the Registrant failing to submit the Tax Return within the timeframe specified in the Tax Law (paragraph h)
• the Taxable Person failing to settle the Payable Tax within the timeframe (paragraph i)
• the Registrant submitting an incorrect Tax Return (paragraph j)

Two paragraphs break that pattern and say whose money the penalty comes out of.

Paragraph (g) is the Legal Representative failing to file a Tax Return within the specified timeframe, in which case the Decree-Law says the penalties will be due from the Legal Representative's own funds.

Paragraph (m) is the Person subject to a Tax Audit, his Tax Agent or Legal Representative failing to offer facilitation to the Tax Auditor in violation of Article 20, in which case the penalties will be due from the Person's, the Tax Agent's or the Legal Representative's own funds as applicable.

That is the finding, and it is narrow enough to be useful. Across the whole of the Article 24(1) list, a Tax Agent's own funds are named exactly once, and the trigger is obstructing an audit, not missing a filing date. A late return by a client the practice acts for is paragraph (h), and paragraph (h) names the Registrant.

None of which makes a late filing costless to the practice. The penalty is the client's, the professional consequence is the practice's, and the contract between them is where that lands. The statute decides who the Authority bills, not who the client sues.

3. Tax Agent and Legal Representative are not the same appointment

The distinction carries real money, so a practice should know which one it has accepted.

A Legal Representative, under Article 7, must inform the Authority within twenty Business Days of appointment, submit the Tax Returns to the Authority on behalf of the Taxable Person, and comply with the requirements of the Decree-Law and the Tax Law. Paragraph (g) above then puts a late return on that person's own funds.

A Tax Agent, under Articles 12 to 15, acts in the client's name under Article 14 and carries the record duties in Article 15, and is nowhere in the list made liable from its own funds for a late return.

A practice that agrees to be appointed as a legal representative of a client entity, rather than as its tax agent, has accepted a materially different exposure. That is a decision to take deliberately.

4. The duties that genuinely are the practice's own

Four, and all of them sit outside the client's filing calendar.

Registration and licence. It is not permitted for any Person to practise the profession of a Tax Agent in the State unless he meets the conditions of registration, is listed in the Register of Tax Agents, and has obtained a licence from the competent local authority (Article 12(2)). The conditions, the suspension and deregistration procedures and the agent's rights and obligations are set by the Executive Regulation, Cabinet Decision No. 74 of 2023 (Article 13(1)), and the agent must notify the Authority if he ceases to practise (Article 13(2)). Records, including for clients you no longer act for. The Tax Agent must keep the information, documents, records and data related to any Person that is or was represented by the Tax Agent, for the period and in the manner the Executive Regulation specifies (Article 15(1)), and must provide all of it to the Authority on request (Article 15(2)). The phrase "is or was" is the operative one: losing the client does not end the file. Facilitating an audit. The one own-funds exposure, from Article 20 via Article 24(1)(m). The Authority must notify the Person of a Tax Audit at least ten Business Days before conducting it (Article 16(2)), so a practice has a known, short window in which to be ready rather than reactive. Language. Returns and the data, information, records and documents related to tax are to be submitted in Arabic, with the Authority able to accept another language provided a translated Arabic copy is given on request, and whoever submits a translation is responsible for its accuracy and bears the associated costs (Article 5).

5. How long a client file stays live, which is longer than most engagements

Three periods, and they do not match each other.

The client must keep records supporting its return for seven years after the end of the Tax Period (Article 56(1) of Federal Decree-Law No. 47 of 2022).

The Authority may not audit or assess a Taxable Person after five years from the end of the relevant Tax Period (Article 46(1) of Federal Decree-Law No. 28 of 2022), with an audit notified inside those five years to be completed within four more (Article 46(2)), and no Voluntary Disclosure permitted after the five years (Article 46(5)).

Then the two long tails. In the case of Tax Evasion the reach is fifteen years from the end of the Tax Period in which it occurred (Article 46(6)), and in the case of a failure to register, fifteen years from the date on which the Taxable Person should have registered (Article 46(7)).

For a practice, Article 46(7) is the one to read twice. Taking on a client that never registered does not bring a five year file into the office. It brings a fifteen year one, measured from a date in that client's past, and Article 15(1) says the practice keeps the records whether or not it still acts.

6. Ending an appointment is an act, not an absence

The Authority may not deal with a Tax Agent in relation to a Person where that Person informs the Authority that the appointment has ended or the agent has been dismissed, in the manner the Authority specifies (Article 14(2)).

Read it from the practice's side. Resigning an engagement, stopping the invoices and deleting the row from the deadline tracker do not of themselves change what the Authority believes about who acts for that client. Closing a client properly is a notification, and until it happens the practice is still holding the relationship it thinks it has put down.

Where this leaves a practice

The statute puts the penalty on the client for late registration, late filing, late payment and an incorrect return. It puts the practice's own money on the line in one case, obstructing an audit, and it attaches record duties to the practice that outlive the engagement and, where a client failed to register, can run fifteen years.

The operational answer to most of that is simply knowing which date every client is on. The client deadline tracker does that part for the whole book at once, free and in your browser, with nothing uploaded and no sign-up, so real client names can be pasted in. What the dates mean for each client's computation is set out on the page for tax agents, and every check behind the figures is listed by name on the verification page.