Accountant Nicholas Birdseye suing tax office for defamation, but it says he has been found to lack integrity

Veteran Adelaide accountant Nicholas Birdseye is suing the tax office for defamation after being deregistered, but it counters that he was a risk to his clients.

Adelaide accountant Nicholas Birdseye is suing the Australian Taxation Office for defamation after it decided to strike him off as a tax agent and told his clients as much, but the ATO has countered that Mr Birdseye was “unprofessional” and had been found to lack integrity.

Mr Birdseye, who was a tax agent from 1981 until being deregistered in 2020, is suing the deputy commissioner of taxation Hoa Wood, seeking compensation for the damage caused to his reputation, the loss of revenue from clients and the drop in value of his business.

Mr Birdseye’s firm, Claim It SA, was placed in liquidation last year with debts of $96,000, after the Administrative Appeals Tribunal (AAT) upheld the Tax Practitioner’s Board’s (TPB) decision to terminate its registration, while setting aside an associated five-year ban against Mr Birdseye applying for re-registration.

In his statement of claim lodged with the Supreme Court, Mr Birdseye says in early February 2020 he was sent about 1100 pages of material detailing allegations about him, and was given just two weeks to respond.

Mr Birdseye says on about February 20 the TPB made a determination that he and his company “had not acted with honesty and integrity as tax agents’’ and had not complied with taxation laws, despite the fact that he had not yet had a chance to respond to the allegations.

Mr Birdseye was told that he would be deregistered as a tax agent and not allowed to re-register for five years.

His court documents state he challenged the TPB’s determination through the AAT, with the ATO abandoning its arguments regarding his honesty and integrity, also saying that “allegations about the applicant’s competence were unsubstantiated’’.

The AAT did however uphold the TPB’s decision to terminate the registration of Mr Birdseye and his company, which had somewhere in the range of 2500-3000 clients.

Mr Birdseye also says the ATO told his clients in September 2020 that his company’s registration had been terminated, and argues the deputy commissioner should have known that at that time the deregistration was being challenged.

The ATO, in its defence, claims its communications are covered by qualified privilege as the clients had an interest in knowing about the registration status of their tax agent.

The ATO also said the TPB’s six month investigation into Mr Birdseye and his company showed that they “had engaged in conduct that created a risk for its clients and undermined the integrity of the taxation system’’.

The ATO says in its defence that the TPB had found Claim It SA failed to lodge seven business activity statements in time, failed to provide a competent service to its clients leading to an audit of 100 customers finding a tax shortfall of almost $900,000 and that “the company’s conduct went beyond carelessness and recklessness’’.

The ATO said the TPB had considered that the company had previously been sanctioned and its clients had been subject to “numerous’’ audits.

The TPB also found the Mr Birdseye had failed to pay tax debts of more than $250,000 for three of his own related entities, the defence states.