Grech and Tax Practitioners Board

[2022] AATA 3401

Grech and Tax Practitioners Board [2022] AATA 3401 (19 October 2022)

Division:Taxation and Commercial Division

File Number(s):      2021/6321

Re:Adam Grech

APPLICANT

AndTax Practitioners Board

RESPONDENT

Decision

Tribunal:Deputy President I Hanger

Date:19 October 2022

Place:Sydney

Decision under review affirmed

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Deputy President I Hanger

Catchwords

Catchwords – Tax agent – whether applicant fit and proper person – whether applicant provides competent tax services – whether applicant adequately supervises employees working under their registration – where applicant unaware of access to their tax agent portal – applicant deemed not a fit and proper person – decision under review affirmed

Legislation

Tax Agent Services Act 2009

Cases

Stasos v Tax Agents Board [1990] FCA 45

REASONS FOR DECISION

Deputy President I Hanger

19 October 2022

1. On 15 July 2021 the respondent terminated the applicant’s registration as a tax agent pursuant to section 60-125 (2)(b)(ii) and s40-5(1)(b) of the Tax Agent Services Act 2009. (“the Act”).  The applicant lodged an application for a merits review of that decision.

2. Section 30-10 of the Act sets out a code of professional conduct to be observed by registered tax agents. Subsection (7) provides as follows: You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently

3. Section 20-5(1)(a) of the Act provides that to be eligible for registration the Board must be satisfied that the individual is a “fit and proper person”.

4. The issues before this Tribunal are the following:

   (a)whether the applicant has breached section 30-10(7) of the Code.

   (b)whether the applicant satisfies the registration requirement that he be “fit and proper person” within the meaning of section 20-5 (1) (a) of the Act.

   (c)whether the decision to terminate the applicant’s registration under section 40-5 (1)(b) of the Act should be affirmed.

5. The respondent alleges that the applicant failed to ensure that a tax agent service that he provided, or that was provided on his behalf, was provided competently. This arises in the following way.

6. The applicant contracted Mr Tzouvelis, an accountant in Victoria, to carry out tax work for him. Mr Tzouvelis is not a registered tax practitioner.[1]

   [1] T5,195.

7. He described his work as follows:

   Jim Tzouvelis is an accountant who is currently working interstate in Victoria, and supervised remotely by software, modem internet programs such as skype and telephone. Jim prepares each preparation by initially having each tax entity sign a letter of engagement, prepare all relevant source documents for entering, source and site ID’s, and then prepare tax return on the portal without lodgement. I as principal then go over and approve/disapprove entered information, and when all information is compliant, I make the final lodgement…

   Mr Farinelli

8. Taxation records show that Mr Farinelli had his taxation records accessed by Mr Grech’s tax practice on three occasions from 24 December 2019 2 March 2020.[2] In response to an enquiry from an investigation officer of the respondent, Mr Grech said, in relation to Mr Farinelli “I have never heard of this person until now”[3] . He also said that he did not have the tax file number or date of birth of Mr Farinelli, and therefore did not know how he could possibly have accessed the business tax portal. This means that, assuming he is telling the truth, he is unaware that another person is accessing his tax portal without authorisation. The person dealing with Mr Farinelli was Mr Tzouvelis.

   [2] T5, 52.

   [3] T5, 62.

9. In response to an enquiry from the respondent in relation to the access to the taxation portal, the applicant, on 30 May 2020, responded to the effect that on 24 December 2019 Mr Farinelli had contacted one of the applicant’s team members to assist him with his tax obligations; that on 3 January 2020 Mr Farinelli called one of his team members and was provided with a reminder of his tax account status; on 15^th of March 2020 Mr Farinelli called one of his team members who provided him with a quote for tax agent services which Mr Farinelli rejected and said he would be returning to his previous tax practitioner.

10. In a letter of 29^th of May 2020[4] the applicant advised the respondent that his firm had obtained a basic engagement form from Mr Farinelli duly signed by him and verified as being the person he claimed to be.

    [4] T5, 68.

11. The respondent requested certain documentation from the applicant and was provided with a copy of a client engagement letter allegedly signed by Mr Farinelli, a copy of a Victorian driver’s licence which had expired in 2019 and a copy of a Belgian passport which had expired in 2017.

12. Mr Farinelli denied that it was his signature on the form and said that he was out of the country. He said that he had not contacted the applicant or its associates at all and that he had gone overseas on 19 December 2019 and had returned to Australia on 6 January 2020.[5]

    [5] T5, 78.

13. Mr Farinelli said he had never met Mr Tzouvulis and never spoken to him on the phone.

14. The respondent submits that the conduct referred to above and in particular the unauthorised access to the tax portal in respect of a person who was not and did not become a client constitutes, together with another matter to which I shall now refer, a failure to ensure that the service provided by him or on his behalf was provided competently. In particular, the respondent refers to the applicant’s failure to have in place adequate supervision and control over individuals providing tax practitioner services under his registration.

15. In a document dated 3 June 2021 the applicant advised the respondent that Mr Tzouvelis does not employ any subcontractors to perform its contractual work.[6]

    [6] T5/631

16. However, six business activity statements were lodged by Anthony Cefala. The ATO wrote to a taxpayer, Mr Constable, who is a director of a company called Havelock Holdings Proprietary Limited. The letter advises that the ATO is reviewing the activity statements of the company between October 2018 and December 2018[7].  The files of the ATO that relate to that company record that the six business activity statements under consideration were lodged by, or purported to be lodged by, the applicant under his tax agent number.[8]

    [7] T 5/124

    [8] T5/148,149,174

17. As a result of the ATO investigation, the ATO concludes that a refund of $5000 was erroneously claimed. Mr Constable confirmed that the statements were prepared by Mr Cefala. That gentleman had obviously used the applicant’s registered tax agent number to access this particular entity’s client portal and lodged the six activity statements without the knowledge of the applicant.

18. Mr Constable says that he has never met or spoken to the applicant and never had any dealings with Mr Tzevoulis in relation to Havelock Holdings.

19. Having initially denied that Mr Tzvoulis employed any subcontractors, the applicant said, “I have been told after making enquiries that some of Jim to Tzouvelis’s client base use Anthony Cefala as a contractor for bookkeeping services”

20. However, this concession was only made after the six activity statements had been lodged. In other words, the applicant had no knowledge of the existence of a person who was accessing his tax portal to lodge activity statements.

21. As a registered tax agent, the applicant is responsible for ensuring that all persons acting for clients under his registered agent number are adequately supervised by him.

22. The applicant practices from Sydney and Mr Tzouvelis is in Melbourne. While a certain amount of supervision can be undertaken using modern technology there appears to be a significant lack of oversight by the applicant insofar as Mr Tzouvelis is concerned.

23. The reality of the situation appears to be that the applicant does not know what is happening under his name. He has not ensured that a taxation service provided by him or on his behalf has been provided competently contrary to the provisions of section 30-10 (7) of the Act.

24. Insofar as the matters set out above are factual, there is not really any dispute about them.  The applicant filed a very lengthy and discursive set of submissions. Those submissions are concerned more with blaming the ATO, the respondent and the taxation systems for his present woes than with disputing the facts.

    Fit and Proper Person

25. In view of what I am going to set out hereunder it is appropriate to quote from one page of the applicant’s submissions to me:

    Which it was not even looked at by anyone at all, and at the Zoom meeting for the stay order the attendants had no idea what CERN is or any knowledge of the experiments of how they work and interrelate. So, it does not fall under the category of religion, as it only shows the interrelationship of the physical and spiritual realms in those experiments? How does that have anything to do with religion? It is a real life experiment and is being fired up in the next couple of days, if it does not achieve their goal then with the help of AI feeding the data into it from this current fire up and working out the requirements then every six months or a year the upgrading will eventually achieve there (sic) goals, so cannot say exactly when but  they are giving it a good go at some point achieving their goal. The applicant is more concerned that no one with a skill set able to see this coming, in any position of authority but instead turns around, and use it against the applicant. In this case called Obstruction and Also Non-Sensible so as to be not a fit and proper person. As twice now the applicant has been defamed for trying to alert a possible event coming but instead defamed and punished.”

26. Between 9 January 2021 and 3 February 2021, the applicant sent three responses to the ATO refusing to provide information requested about his tax affairs had said that the ATO did not have authority over him. On 3 February 2021 he sent an email to an officer at the ATO saying:

    “As my word is supreme above government laws, and the king requests –

    1 Please stop this witchhunt on wanting to know even how I spend my money – therefore the investigation is to cease.

    2 That whatever the Australian government has given to CERN from the 1950s to date in funding the equivalent amount is to be given to me to educate the world community via advertisements and youtube videos creations to put pressure on CERN to see if their experiments in regards to the LHC Collider. Also as king I would maybe be able to overturn the Council of Men who are the highest law in the world presently, but might be forced to take a king’s word being supreme over their Council of Men. We need to act fast as they will start using metals in the collisions which will tear through the veil easier”

27. On 31^st of March 2021 the respondent received a referral from the ATO about the applicant’s behaviour. The referral advised that the applicant had not provided documentation requested by the ATO concerning his own tax affairs but provided responses to the ATO which advise that “the ATO does not have the authority as [the applicant] has been appointed a King by God and the man appointed counsel does not have authority over a King.”[9]

    [9] T5, 51.

28. There are similar instances which I will not bother to set out. It is clear that the applicant was suffering from a mental disorder.

29. On 22 May 2021 the respondent received a report[10] from Ms Janet Tombleson, a clinical psychologist concerning the applicant’s fitness to work after a period of hospitalisation. She concluded that the applicant had the “lucid mental capacity, cognitive abilities and ego strengths to conduct himself in a fit and appropriate manner for his field of work”. The report was criticised in that she referred to the applicant as servicing a client base of 500 whereas in fact it was over 1500 and it was unclear whether she was aware of the inappropriate correspondence that the applicant had sent to the ATO and the Board. I found the report of little assistance.

    [10] T5, 649-651.

30. One month after the report of the psychologist, the applicant sends an email dated 28 June 2021[11] to the respondent. It contains the following:

    “The sole purpose was not to do with trying to cheat tax, it is about the only way of stopping a LHC Collider from tearing a hole between the physical and spiritual realm as they do not understand what they are doing. My emails explain it if you looked into it properly. As if you took the time to study what I sent you. You might just understand it. The only way to stop a Council of Man that governs the LHC Collider is to be recognised as a King, that is the only way to stop it from happening is to have a superior position – if you decide that I am not a fit and proper person then if the event happens – what then? Will you compensate me and those affected? Can you all lose your jobs that participated in the judgement? How will you go on judgement day when you turned on someone trying to help people and asking for help but instead destroying his livelihood? I would not like to be in their shoes.”

    [11] T6/708

31. Ms Tomlinson provided a further report dated 5 May 2022 in which she reiterates that the applicant is a fit and proper person. In being asked why her opinion remains the same she states that the correspondence “appears to me to be extracts from an unrelated private conversation unrelated to tax matters.” She says the applicant was confused by the 600+ pages sent by the tax investigators to decipher.

32. Obviously, the correspondence between the applicant and the ATO and the board did concern relevant matters and did relate to his work.

33. I obtained no assistance from the report.

34. In Stasos v Tax Agents Board [1990] FCA 45, Hill J said (at 444);

    In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the boards or tribunal to which I have referred. Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate.

35. The attitude of the applicant to the ATO and to the respondent has not and could not presently be conducted in an atmosphere of mutual trust.[12] He has continued to refer to CERN, regards the ATO as the enemy and addresses its officer as “minion”.

    [12] See for example ST 3, 864; ST 4, 865-868; ST 7, 877-911; ST 8, 912.

36. The issue which I must decide is to be determined as at the time of hearing. I must be satisfied that the applicant is a fit and proper person for the purposes of registration. It is clear that the applicant has suffered from a mental illness. It seems as if this goes back a number of years, he because the psychologist has dealt with him since 2009.  One would hope that with appropriate treatment and medication, he might possibly be able to work in his chosen profession in the future,  but given the email of 28 June 2021 after he was said to be of lucid mental capacity and add to that the submissions which he has put before me in these proceedings it is abundantly clear that he is not a fit and proper person to handle the affairs of a client. The public could have no confidence in him at all.

37. The decision under review is affirmed.

I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President I Hanger

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Associate

Dated: 19 October 2022

Date(s) of hearing:	11 July 2022
Counsel for the Respondent:	Mr T Liu
Solicitors for the Respondent:	Tax Practitioners Board