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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17613
Experience:  International tax
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I operated a company based in Israel supplying counseling

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I operated a company based in Israel supplying counseling staff to American summer camps. The camps requested staff from me, signed a contract with me and paid me a fixed fee for finding and selecting suitable candidates. Part of that fee was to cover flights and insurance for recruited applicants paid for by the camps. I sort advice from a leading tax lawyer in Israel and received a written opinion that on income received for services given to a foreign company outside of Israel, I would be exempt from VAT tax on that income. Inline with OECD regulations and even Israeli law stating that the income is zero rated in order to allow companies to compete with other international companies. However, the Israeli VAT 'amended' the law after I received legal advice and demanded back pay stetching back to 2006 (3 years) saying that we did not conform to the the amendments. The amendment said that 'if an Israeli ALSO benefited from the service being offered to the camps, then the fees obtained from the camps would not be zero rated'. This in fact negates the exemption completely and is not in line with OECD regulations of which Israel is party to. My question is - as laws change all the time, I the owner of the company am legally responsible to conform to the laws however, who had legal responsibility to inform me of the changes? The VAT? My company accountant who filled in blank cheques every month made out to the VAT for current VAT obligations? My company lawyer? The legal adviser who gave me his professional opinion? As an added twist, the VAT is a government office. But the Israeli government also sent staff to American summer camps and competed directly with me and as a government agency, THEY ARE EXEMPT FROM PAYING VAT TAX. So the same government, with different hats, were competing with me AND suing me.

I ceased trading at the time and the company is awaiting the outcome of a*****ruling on this issue. However, on a personal issue, I have lost a business of almost 20 years and I went into a deep depression which is recorded in medical files. I'm looking to sue the responsible party who had the responsibility of informing me of changes in the law. I'm guessing its my company accountant of 18 years but I may be wrong. Many thanks

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It was brought to our attention that you asked a question about Israel, where we do not have active professionals. As much as we would like to assist you, we have to be honest and say that the best we can do is maybe to provide a legal Internet researcher who might be able to find your answer. We realize that option is not ideal, and we always want to provide our customers with the best possible answer.
At this time, we'd like to give you the option of leaving your question open. Keep in mind that you're never obliged to accept an answer that you're not satisfied with, and you can try it out before you accept. Or, we can close your question page for you, if you prefer.
Please let me know how you’d like to proceed,
Customer: replied 2 years ago.

I would guess any European tax expert familiar with the OECD and international trading laws would be able to answer the question. not specifically an Israeli expert.

Please advise

I will try this in the UK Tax category for you for now and see if anyone there can answer.
Thank you,
Customer: replied 2 years ago.

thank you

Hello,Most written or oral tax advice is not intended to be aggressive, it is intended to inform taxpayers what the law says. If your accountant advised you on a proper procedure when the question was posed and then as you stated" the Israeli VAT 'amended' the law after I received legal advice and demanded back pay stetching back to 2006 (3 years) saying that we did not conform to the the amendments"they would not and should not be seen as intentionally offering you wrong advise.Taxpayers have a right and an obligation to understand the law and to take expert advice when necessary – ignorance is no defense. The reliance on a professional will generally be seen as a way to reduce penalties by the taxing authority.You stated you wish to sue the responsible party. That is best addressed with your attorney.
Customer: replied 2 years ago.

A top tax attorney advised me IN WRITING prior to the amendment that no VAT was applicable on my foreign earnings. I don't have an issue with the legal advice given.

The clause in question has been in the courts many times over the past 15 years due to it's vagueness. I am not a lawyer and therefore, I had a company accountant who filed all VAT returns for the entire existance of the company. Even HE said he doesn't understand why the VAT were requesting backpayments from me.

In reality, if lawyers and courts contend the clause (30 a 5) of the tax laws, how am I, as the CEO of the company be expected to understand the law?

My issue is with the accountants professional responsibility. If HE filed my vat returns every 2 months (with a blank and signed check he had in his possession), why isn't it HIS professional responsibility to inform me of amendments to the current laws.

Thanks. Philip

I would only add that until the court ruling is supplied you should wait to press a legal issue against your accountant.
Customer: replied 2 years ago.

of course. but in your opinion, do i have a case against my accountant?

You have a case for them correcting the filing. You also would have a case for the accountant to pay for penalties and interest that are placed on you (or the company) for not correcting the filing after the law was changed and made retroactive.The personal issues you suffered because of the action or non action on their part is not covered by tax law so I cannot give an opinion on a grievance for that.
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17613
Experience: International tax
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Customer: replied 2 years ago.