The AAT has confirmed that a tax agent was not a fit and proper person to continue to be registered as a tax agent and that his registration should be terminated in view of his apparent unwitting involvement in fraud by third parties that had sought his services. This apparently involved fraudulent intermediaries holding themselves out as representatives of well-known recruitment agencies and who had claimed to have been engaged by a number of clients to lodge tax returns on their behalf. As a result, the tax agent had lodged tax returns for the purported clients, which resulted in tax refunds being paid into nominated bank accounts.
The Tax Practitioners Board had disqualified the tax agent from re-applying for registration for a period of 3 years following an investigation into the matter, and in view of the fact that tax file numbers of over 450 taxpayers being compromised. The Board also found he had breached provisions of the relevant regulatory legislation by preparing and lodging tax returns for 370 taxpayers for the 2011 financial year in respect of which he was reckless as to whether the statements made in those tax returns were false or misleading. The tax agent argued in defence that he did not deliberately disclose any information about client’s affairs to these representatives and otherwise prepared the returns with due diligence and care and that he was the innocent victim of an extremely well-planned, clever and executed scheme.
The AAT took into account the relevant legislative provisions and also noted the need for “specific deterrence”. It said that while it was necessary to balance the personal hardship of the tax agent resulting from his disqualification, this had to be weighed against the public interest, and that in this case, the public interest was in favour of termination and a sufficiently lengthy disqualification to ensure the public was protected and so that other tax agents would be deterred from engaging in any similar conduct. Finally, the AAT also rejected a proposed plan of supervision as an alternative to the agent’s termination and disqualification.
(AAT Case [2014] AATA 299, Re Li and Tax Practitioners Board , AAT, Ref Nos 2013/3896 and 2013/4154, Redfern SM, 14 May 2014.)
[LTN 93, 16/5/14]