Ridden v Tax Practitioners Board

Case [2020] AATA 422

Ridden and Tax Practitioners Board [2020] AATA 422 (6 March 2020)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2019/5846

Re:Heather Ridden

APPLICANT

AndTax Practitioners Board

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:6 March 2020

Place:Sydney

The decision to terminate the applicant’s registration is affirmed, but the decision to prohibit her from applying for registration is varied so that she will be permitted to seek registration after two years from the date of termination.

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Deputy President Bernard J McCabe

CATCHWORDS

TAX AGENTS – termination of registration as tax agent – applicant prohibited from applying for registration for period of three years – contraventions of the Code of Professional Conduct – where applicant failed to disclose convictions for failing to comply with requirements under taxation law –applicant failed to disclose previous regulatory action –applicant failed to manage personal tax affairs – applicant failed to account to clients for monies received on trust – applicant failed to respond to requests and directions from the Board – whether action should be taken against the applicant – whether three year ban was appropriate – decision to terminate affirmed – decision to ban varied to two years

LEGISLATION

Tax Agent Services Act 2009 (Cth) ss 2-5, 30-10, 30-20, 30-30, 40-25
Tax Administration Act 1953 (Cth) s 8C

CASES

Kishore and Tax Practitioners Board [2017] AATA 271
Li and Tax Practitioners Board [2014] AATA 299
Rent to Own (Aust) Pty Ltd and Australian Securities and Investments Commission [2011] AATA 689
Sovereign Capital Limited and Australian Securities and Investments Commission [2008] AATA 901

REASONS FOR DECISION

Deputy President Bernard J McCabe

6 March 2020

  1. Tax agents play an important role in our community. They assist ordinary taxpayers and businesses to manage their (sometimes complex) tax affairs. Tax agents deal with the Commissioner of Taxation on a client’s behalf. Tax agents must exhibit a high level of competence and skill if Australia’s self-assessment system is to work efficiently as intended. They must also be trustworthy. There is a strong public interest in ensuring that tax agents are properly regulated.

  2. To that end, Parliament established a regulatory regime for tax agents. That regime is now found in the Tax Agent Services Act 2009 (Cth) (the TAS Act). At the heart of the regime is a requirement that a person providing tax agent services for reward must be registered by the Tax Practitioners Board (the Board).

  3. A registered tax agent enjoys a privileged position relative to others who are not registered.  The privileges associated with registration come with expectations. For example, a person must have appropriate qualifications in order to be registered. The person must also conform to certain rules and standards in order to maintain their registration.

  4. Heather Ridden was a registered tax agent. She failed to comply with a number of the rules and standards prescribed in the TAS Act. On 22 August 2019, the Board decided:[1]

    ·Ms Ridden had contravened the Code of Professional Conduct in s 30-10 of the TAS Act…

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Details
AGLC
Ridden v Tax Practitioners Board [2020] AATA 422
Case
[2020] AATA 422
Decision Date

CaseChat Overview and Summary

This matter concerned an application by Ms Ridden to review a decision of the Tax Practitioners Board. The Board had terminated Ms Ridden's registration as a tax agent and prohibited her from applying for registration for a period of three years. The grounds for the Board's decision included contraventions of the Code of Professional Conduct, specifically failing to disclose convictions for failing to comply with taxation law requirements, failing to disclose previous regulatory action, failing to manage her personal tax affairs, failing to account to clients for monies received in trust, and failing to respond to requests from the Board.

The court was required to determine whether the Tax Practitioners Board's decision to terminate Ms Ridden's registration and impose a three-year ban on re-application was appropriate. This involved considering the objective seriousness of Ms Ridden's conduct, the need for specific and general deterrence, and the public interest in maintaining confidence in registered tax agents, weighed against the adverse consequences for Ms Ridden.

Deputy Bernard J McCabe P affirmed the decision to terminate Ms Ridden's registration. However, the court varied the decision regarding the prohibition period, reducing it from three years to two years. The reasoning was that a two-year ban would strike an appropriate balance, allowing Ms Ridden time to undertake courses of study that could demonstrate her fitness and propriety to the Board upon her eligibility to seek re-registration.

Orders

Orders of the court

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Background

Background to the litigation

The decision under review should be varied. I explain my reasons below. The background Ms Ridden has practised as a registered accountant since 1999. She has been a sole practitioner for most of that period. She employed an administrative assistant but did not have any other tax agents or qualified accountants working for her. The applicant has been in trouble before the events which gave rise to the current proceedings. She experienced difficulty in managing her own taxation affairs in 2011, 2012 and 2013. She failed to file income tax returns and a number of business activity statements (BAS). The delay was such that Ms Ridden was charged with failing to comply with requirements under taxation law in contravention of s 8C of the Taxation Administration Act 1953 (Cth). She was convicted and orders were made against her on 5 March 2014.[2] [2] Exhibit 1, T3, p 46. Ms Ridden was also subject to regulatory action in 2013-2014. Following an investigation, the Board concluded she had breached ss 30-10(1), (2), (3), (7) and (13) of the Code of Professional Conduct in the TAS Act. The Board decided to terminate the applicant’s registration on 12 March 2014.[3] After review proceedings were commenced in this Tribunal, the Board agreed to issue a written caution and order the applicant to complete a course of study in relation to trust accounting and the Code of Professional Conduct.[4] [3] Exhibit 1, FST1, p 363-370. [4] Exhibit 1, T3, p 243-245. The applicant has not complied with the orders that were made as part of the resolution of the 2014 disciplinary proceedings. She said in her evidence at the hearing in this matter that she intended to enrol in the appropriate courses but prioritised other work. She insists she would definitely (if belatedly) undertake the course of study if she is allowed to resume practicing. The applicant’s conduct post-2014 The Board made a number of adverse findings against Ms Ridden that led to the reviewable decision in this case. She accepts those findings but I must still briefly describe what happened because the nature and seriousness of the contraventions is a relevant factor in determining what regulatory action should be taken. I will deal with each of the findings in turn.The applicant did not act with honesty and integrity in contravention of s 30-10(1) of the Code of Professional Conduct Ms Ridden failed to disclose the fact of her convictions or the regulatory action taken against her in annual declarations she completed in connection with her 2016 and 2018 registration, and in her tax agent renewal form in 2017. All of those documents asked the applicant to declare any ‘matters that may affect your good fame, integrity and character’ including, for example, instances where the applicant has been subject to any disciplinary action by a regulator or professional association. Ms Ridden now accepts she should have disclosed the convictions and the 2014 decision. She says it did not occur to her that she should disclose those matters because she regarded them as concluded. She insists she did not try and keep those matters a secret. She just did not mention them.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The objective seriousness of the conduct, the need for specific and general deterrence and the public interest in a ban that would promote confidence in tax agents need to be considered against the serious adverse consequences for the applicant. In all the circumstances, I think an effective ban of two years strikes the appropriate balance. During that time, the applicant will be able to undertake courses of study that might demonstrate to the Board when she becomes eligible to seek registration that she is a fit and proper person. Conclusion The decision to terminate the applicant’s registration is affirmed, but the decision to prohibit her from applying for registration is varied so that she will be permitted to seek registration after two years from the date of termination.

Ratio Decidendi

Legal Principle Established

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