What to Do When a Financial Manager's Work Mistake Leads to Tax Penalties and the Manager Has Already Resigned?

Shanghai Company A received a tax handling decision from the tax bureau, requiring an additional collection of late fees of about CNY 80,000 due to unconfirmed income. However, the financial manager responsible for accounting and tax reporting at Company A had resigned nearly half a year ago.

Company A initially thought it could not hold the former financial manager personally responsible and planned to bear the loss as an extraordinary expense on its own.

But after Company A discussed the issue with Dongjin, Dongjin believed that: as the financial responsible person, the former financial manager had a review responsibility for the company's tax work. His failure to confirm income was a significant work negligence, which had a direct causal relationship with the additional late fees imposed on Company A. Company A had the right to claim compensation from the former financial manager.

Company A filed a lawsuit, and ultimately, the court, based on the actual situation, determined that the former financial manager should compensate Company A CNY 30,000.

Dongjin suggests: Financial personnel within a company may, due to lack of experience and ability, cause the company to be penalized due to work negligence. However, even if the financial personnel have resigned, the company still has the right to claim compensation. At the same time, to avoid "blind spots" in the company, enterprises can avoid such risks by regularly conducting internal audits through external third-party professional institutions.

If any enterprise has any questions, please feel free to contact Dongjin at any time.

Mike Chang

Partner

mikechang@shanghaiinvest.com