Khor and Tax Practitioners Board (Taxation)

[2019] AATA 5635

Khor and Tax Practitioners Board (Taxation) [2019] AATA 5635 (2 December 2019)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2019/5508

Re:Tim Huat Khor

APPLICANT

AndTax Practitioners Board

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:2 December 2019

Date of written reasons:        6 January 2020

Place:Melbourne

The application for a stay of the decision under review is refused. The interim stay order dated 3 October 2019 be discharged on 6 December 2019.

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Deputy President Bernard J McCabe

CATCHWORDS

PRACTICE AND PROCEDURE – STAY APPLICATION – decision to terminate tax agent registration for failing to comply with taxation laws in personal affairs – impacts on the applicant – impacts on third parties – stay necessary to be able to continue to pay off debt – no payment plan – applicant’s history of non-compliance with repayments – no confidence in repayments if stay granted – public interest – whether the public interest is affected by the lack of commitment to comply with taxation laws – stay refused

LEGISLATION

Administrative Appeals Tribunal Act 1975 section 41

Tax Agent Services Act 2009

CASES

Scott and Australian Securities and Investment Commission [2009] AATA 798

SECONDARY MATERIAL

Code of Professional Conduct

REASONS FOR DECISION

Deputy President Bernard J McCabe

6 January 2020

1. At the conclusion of an interlocutory hearing by telephone held on 2 December 2019, I made a decision to refuse the stay application and gave oral reasons. Written reasons were requested by a party. The following reasons have been distilled from the transcript made of the recording at the hearing.

2. This application arises from a decision of the respondent to terminate the applicant’s tax agent registration and prevent him from reapplying for registration for 5 years. Following an investigation, the respondent decided the applicant was in breach of section 30-10(2) the Code of Professional Conduct in the Tax Agent Services Act 2009. It found the applicant had failed to comply with taxation laws in the conduct of his personal affairs by failing to pay a substantial tax debt, accumulated over an extended period of time. It further noted the applicant had made little effort to address these personal tax obligations.

3. The applicant filed, with his substantive application for review, an application for a stay of the decision pending the outcome of the review. The application for a stay under section 41(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) requires that I be satisfied the stay order can be made for the purpose of securing the effectiveness of the hearing and determination of the application for review. Provided I am so satisfied, the question then is whether a stay order should be made, having regard to the interests of any persons who may be affected by the review.

4. Mr Khor has said there are two reasons why the stay should be given to secure the effectiveness of the hearing and a determination of the review. He said he is currently making payments to the ATO and he will be unable to continue to do so if he does not get the stay. The other thing he says is relevant is that his business may be severely impacted and he may go out of business. He has asserted that he will not be able to retain staff or his rented premises. I accept the impact of being unable to trade, even if an expedited hearing can be arranged, is likely to be a significant impost on him.

5. The applicant is making payments and has paid about $27,000 over the last few months towards a larger debt in the order of a quarter of a million dollars. However, despite having ample opportunity to do so, he has been unable to secure a repayment arrangement with the ATO. A viable repayment arrangement that was being complied with would give some substance to his claim that he should have the opportunity to continue making repayments. His past conduct and the lack of a repayment plan indicate that giving him the opportunity to continue his practice would not necessarily improve his compliance.

6. The applicant instead appears to be relying upon the repayment to him of an amount of money from a Mr Herbert who the applicant asserts has been promising to repay money to him for quite some time. The money is yet to materialise.

7. If I accepted, for the purposes of the argument, that the stay was for the purpose of securing the effectiveness of the hearing determination of the application for review, I must have regard to the factors mentioned by the respondent which are dealt with in Scott and Australian Securities and Investment Commission [2009] AATA 798, which direct our attention to a non-exhaustive list of factors for consideration.

8. One of the important questions to be considered is the prospects of success, which is a consideration of the merits of the case. The applicant has not been complying with his personal taxation obligations over a long period of time. The debts may stretch back as far as 2011, although there appears to be some contest about that. The applicant has not provided any basis at this point to give me a high level of confidence that there are merits to the application for review. His argument appears to be that when Mr Herbert (an individual who reportedly owes money to the applicant) returns and makes good on his obligations to the applicant, the applicant will be in the position to pay off the debts. This does not necessarily tell us much about the merits of his case, addressing why he accumulated such a debt in the first place. The prospects of success at the substantive review are currently unclear and where there has been relatively slow progress towards the resolution of the obligations, I am not filled with confidence.

9. I accept there will be serious consequences for the applicant if he is unable to continue practicing and that will have implications for his family and for his two employees. There will also be some inconvenience for his approximately one thousand clients who would be forced to find another tax agent if he were not able to continue practising in the short term. I accept that damage might be difficult to undo in the event he is successful at the final hearing.

10. The consequences for the respondent do not appear to be a relevant consideration here but the public interest is a matter of some concern. The respondent points out that the whole regulatory regime is designed to ensure there are professional standards in place which promote the integrity of the profession and command the confidence of the public.  The respondent submits that if the applicant is permitted to remain in practice in the short term, where he has not really demonstrated a commitment to becoming compliant, it would raise questions about whether the public interest would be preserved. I am not convinced the public interest is directly endangered in the short term. Although it is unclear whether the applicant would be able to make good on his promises of good intentions to meet repayments, I am not persuaded the public interest weighs strongly against the granting of a stay.

11. On balance, in the absence of an arrangement with the Tax Office, I am not inclined to say that a stay is the appropriate course here. Such an arrangement would have given me some confidence that there are prospects for success when it comes to the final hearing. It would also buttress his request for a stay by giving some assurance that he would use the opportunity to address his indebtedness.  In the current circumstances, the stay should be dissolved. If Mr Herbert pays the amount of money the applicant expects to receive, and the applicant is able to approach the Tax Office and negotiate a payment arrangement, then we can revisit the question of the stay.

12. But unless and until some progress is made in that front, I do not believe a stay is justified in these circumstances and so I refuse the application for a stay and order that the interim stay be dissolved  on 6 December 2019 to allow the applicant to inform his clients and finalise arrangements.

I certify that the preceding 12 (twelve) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

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Associate

Dated: 6 January 2020

Date(s) of hearing:	2 December 2019
Date final submissions received:	2 December 2019
Applicant:	By phone
Solicitors for the Respondent:	Ms E Markesinis, Tax Practitioners Board