The AAT has decided to replace the Tax Practitioners Board’s decision to terminate an applicant’s tax agent registration with a caution accompanied with specific sanctions after taking into account the applicant’s history of personal and mental health problems.

In October 2014, the Board found the applicant had failed to comply with 3 sub-sections of the Code of Professional Conduct. It was alleged the applicant had delayed the provision of tax refunds to around 70 “fee from refund” clients by more than 14 days and had in some 50 cases, transferred the refunds from the trust bank account into the business bank account (which reduced the overdraft interest incurred by the business account for as long as the refunds remained in that account). All refunds were eventually passed on to clients.

The AAT heard the applicant operated her own tax agent practice and experienced business and financial pressures, and for the 10 years leading to the problematic period of her practice, she was the subject of serious domestic violence and developed depression which was said to be not unconnected with the history of domestic violence.

The AAT said: “A practitioner’s state of health or domestic circumstances or both may explain how unprofessional conduct came to occur but does not change the character of that conduct: it remains unprofessional conduct based on an objective assessment of the events that occurred. That said, under the new regime for regulation of tax agents it is clear that the role is not to punish but to take action so as to encourage maintenance of standards.”

The AAT decided that “in the circumstances … on a fine balance recognising the severe difficulties that have contributed to the applicant’s predicament, an appropriate sanction … is to vary the decision under review”. In place of the cancellation of the applicant’s tax agent registration, the AAT directed that (broadly): the applicant be given a written caution; the applicant’s registration be restricted; the applicant undertake an approved trust accounting course; and the applicant provide to the Board details of any and all bank accounts she operates.

(Re SRBP and Tax Practitioners Board [2016] AATA 456, AAT, Ref No: 2014/5366, O’Loughlin SM, 30 June 2016.)

[LTN 126, 4/7/16]