Ridden and Tax Practitioners Board

[2019] AATA 6545

Ridden and Tax Practitioners Board [2019] AATA 6545 (18 October 2019)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2019/5846

Re:Heather Lynette Ridden

APPLICANT

AndTax Practitioners Board

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:18 October 2019

Date of written reasons:        18 December 2019

Place:Sydney

The application for a stay of the decision under review is refused. The operation of the interim stay order of the Tribunal dated 25 September 2019 is extended only until 1 November 2019 subject to an undertaking by the applicant that she:

(a)will not accept any new clients;

(b)will not take on any new work from existing clients;

(c)understands tat the extension of the interim stay is to facilitate the finalisation and transfer of its work to other tax agents; and

(d)will write to each of her existing clients to inform them of the operation of the interim stay and how their work is to be disposed.

..................................[sgd]......................................

Deputy President Bernard J McCabe

CATCHWORDS

PRACTICE AND PROCEDURE – STAY APPLICATION – whether the decision to cancel the applicant’s tax agent registration should be stayed – whether the stay is necessary to preserve the efficacy of the review proceedings – impacts on the applicant – impacts on third parties – impact of respondent’s regulatory role – prospects of success – stay refused

LEGISLATION

Administrative Appeals Tribunal Act 1975 section 41(2)

Tax Agent Services Act 2009

CASES

Scott and ASIC [2009] AATA 798

SECONDARY MATERIAL

Code of Professional Conduct

REASONS FOR DECISION

Deputy President Bernard J McCabe

18 December 2019

1. These reasons relate to an application for a stay application that was dealt with at an interlocutory hearing on 18 October 2019. At the conclusion of the hearing, I made a decision on the application and gave oral reasons. One of the parties subsequently requested a written statement of reasons. The written statement which follows is distilled from the transcript made of the recording at the hearing.

2. This application arises following a decision of the respondent to terminate the applicant’s tax agent registration and prevent her from reapplying for registration for 3 years. The respondent found the applicant had breached the Code of Professional Conduct in the Tax Agent Services Act 2009. The applicant was found to have failed to act honestly and with integrity in failing to disclose past convictions for taxation offences in annual declarations and an application for renewal of registration: s 30-10(1). She further failed to comply with taxation laws in her personal affairs by not lodging a number of income tax returns and business activity statements, and failed to comply with notices from the Australian Taxation Office to lodge these documents: 30-10(2). The respondent also found the applicant failed to account for money received on trust for clients in a timely manner (s 30-10(3)) and failed to respond to requests and directions from the respondent in a timely and reasonable manner: s 30-10(14).

3. Although the implementation of a decision under review is ordinarily not affected by a review lodged to the Tribunal, the Tribunal may grant a stay of a decision where it is desirable to do so. The power to grant a stay order is not an unlimited power to simply contain or prevent hardship. Rather, its purpose is to secure the effectiveness of the hearing and determination of the application for review. If this threshold requirement is passed, I must consider whether it’s desirable to make an order, either absolutely or on conditions, after taking into account the interests of persons affected. Scott and ASIC [2009] AATA 798 sets out a non-exhaustive list of considerations which provide a useful guide to assessing desirability.

4. Between 2012 and 2014 there were problems which resulted in regulatory action and problems more recently which have persisted, and while many of the problems have now been resolved, there are questions of honest disclosure. That there are prior convictions is unsettling and the applicant’s failure to disclose them is a problem. While the applicant explains she did not appreciate the significance of those convictions and why they needed to be disclosed, it is clear these convictions did need to be disclosed.

5. The applicant has also been the subject of previous regulatory action which was settled before final hearing before the Tribunal. As part of the settlement, the applicant made undertaking which were not satisfied. I accept this was a result of personal difficulties the applicant faced, but the fact is it wasn’t done.

6. The applicant acknowledges the impugned conduct has occurred which is an encouraging sign. The applicant’s arguments on review before the Tribunal are instead a challenge to the severity of the sanction. The applicant argues that health conditions and unfortunate personal circumstances impacted on her ability to get her tax practice in order. She says these problems have been occurring over a significant period of time from at least 2014, mitigating the extent of her breaches of the Code and being grounds for granting leniency in the regulatory action taken against her. At this preliminary point without the benefit of the evidence, it is difficult to make a finding one way or another about whether this application has good prospects of success. There has been a number of compliance issues in this matter, and the extent to which the evidence can mitigate the seriousness of such issues remains to be seen. If the applicant’s medical and personal circumstances continue to have a bearing on her ability to discharge her obligations as a tax agent, this would be a cause for concern.

7. The applicant submitted during the hearing that she is the breadwinner in the family with an ill husband, and he will undoubtedly be affected if she is not able to practice as a tax agent. While there are no employees, the applicant’s practice has up to 400 clients which will be inconvenienced by the need to find an alternative tax agent. While there is no clear evidence before me, I accept that if the applicant is unable to practice while the Tribunal proceedings take place, she will experience hardship in providing for her family and significant loss as clients have to go elsewhere. In the event she is ultimately successful on review, it will take some time for her to restore her position.

8. In considering the public interest, while the clients of the applicant are certainly part of the public, the consideration is broader than the immediate impacts on clients. In a regulated profession such as in this case, the public must have confidence in the regime which regulates professional practitioners who are expected to operate with expertise.

9. In weighing up the interests of the parties who might be affected by a review I have noted the findings that have been made against the applicant, which include findings of dishonesty, or at least a failure to disclose, various administrative failures, and a failure to do what she was supposed to do following the last occasion.

10. Those matters need to be all be weighed into the balance, but I have to come back and deal with the first issue, the preliminary issue, the jurisdictional issue, which is: is this stay necessary or appropriate for the purpose of ensuring the efficacy of the hearing and review process? While the applicant will experience substantial loss there is nothing before me to conclude that she will not be able to deal effectively with the review, if it were completed in a comparatively short period of time. I do not consider the preconditions necessary for the exercise of the stay power have been met, so I am unable to grant a stay. But even if the discretion to grant a stay arose, I cannot justify doing so in light of the considerations above.

11. The application for a stay is denied. The interim stay order dated 25 September 2019 is extended only until 1 November 2019 to allow the applicant to finalise arrangements in relation to her existing clients. It will also give the applicant an opportunity to find another registered tax practitioner, with the confidence of the respondent, to step into the practice in the interim. The short extension to the interim order is subject to an undertaking by the applicant that she:

    (a)will not accept any new clients;

    (b)will not take on any new work from existing clients;

    (c)understands the extension of the interim stay is to facilitate the finalisation and transfer of its work to other tax agents; and

    (d)will write to each of her existing clients to inform them of the operation of the interim stay and how their work is to be disposed.

I certify that the preceding 11 (eleven) paragraphs are a true copy of the reasons for the decision herein of Deptury President Bernard J McCabe

...................................[sgd].....................................

Associate

Dated: 18 December 2019

Date(s) of hearing:	18 October 2019
Date final submissions received:	11 October 2019
Applicant:	In person
Solicitors for the Respondent:	Ms L Chen, Tax Practitioners Board