EY partner cites right to silence on ATO court claims

A former EY partner will not respond to key elements of the ATO’s court claims against him, citing potential penalties.

The EY building at Sydney Circular Quay. Picture: Chris Pavlich

A former high-flying EY tax partner is seeking the right to silence, with his lawyers telling the Federal Court he risked incriminating himself by responding to several claims from the Australian Taxation Office.

In court on Thursday lawyers for the former EY partner, who cannot be named due to court orders, revealed he had sought to make a number of claims of privilege over documents seized by the ATO.

Justice Geoffrey Kennett heard EY had handed over nine documents to the ATO, as the tax office turned the screws on its investigations into the former partner who is alleged to have masterminded a $700,000 tax exploitation scheme.

This came as the ATO prepared to hand over a redrafted version of its statement of claim to the former partner.

But Russ Johnson, appearing for the former EY partner, said his client would seek not to respond to “certain pleading requirements” noting responding could exposure him to penalty.

The ATO alleges the former partner’s tax schemes constituted a breach of the promoter penalty provisions of the taxation act, with the EY private clients consultant constructing tax loss schemes for clients between November 2016 and April 2021.

Lawyers for the ATO told the court the former EY partner had made privilege claims against seven documents so far, noting they expected further challenges on the nine new documents.

The ATO also pushed for the matter to go to trial, after being first filed in August 2023, seeking a date in the coming six months.

The matter will be heard again on June 19.

The latest tussle in the case comes after frantic attempts by the EY partner to suppress his name, after the man’s lawyer argued its publication would be harmful to his mental health.

The partner has made repeated attempts across different courts.

The court only moved to allow EY to reveal the firm had formerly employed the partner in November last year, despite the firm being notified about the ATO’s investigations in June 2021.

EY Oceania chief executive David Larocca previously said the ex-partner’s alleged conduct was “absolutely unacceptable”.

The ATO alleges the former partner assisted clients by establishing tax loss trust schemes, which saw beneficial interests in sites transferred at below market value, while tax losses were applied against the distribution of income from a trust.

A former client of the EY partner is now suing the firm and the partner in the NSW Supreme Court alleging the scheme saw him face millions more in taxes and penalties after intervention by the ATO.