EY tax partner set to face final hearing next year after ‘skirmishes’ and delays

A sacked former EY tax partner is set to face a final hearing in court next year, amid allegations he masterminded a $700,000 tax exploitation scheme.

Lawyers acting for a sacked Ernst and Young partner accused of masterminding a $700,000 tax exploitation scheme want swathes of a court case lodged against him struck out as the Federal Court set down dates for a final hearing in the matter.

Despite plans to finally bring the matter, which was first launched in August by the Australian Taxation Office, to a head on March 31 for two weeks, Justice Geoffrey Kennett said on Tuesday he will “very likely” need to revisit the dates amid multiple challenges put on by the former partner against the case which have yet to fully play out.

Appearing for the ex-EY partner, whose identity is being kept secret due to court orders, barrister Russ Johnson told the court his client planned to ask if “portions” of the ATO’s pleadings be struck out.

“The respondent has myriad complaints about the form of the pleading,” he said.

It came after the ATO lodged an updated version of its statement of claim, which Mr Johnson said had “substantial defects”.

Justice Kennett said it was not “satisfactory” to complain about the case which has been lodged for months without explaining what the former partner intended to do about it.

Mr Johnson confirmed he intended to put on an application to strike out parts of the proceeding, but has been delayed due to a “major interlocutory skirmish” about suppression and nondisclosure orders.

He said some of the ATO’s redrafted points compounded the existing defects in the case and a “great many” of the amendments are opposed.

The former partner has claimed his mental health is in jeopardy if his name it to be published alongside the serious allegations made against him and suppression applications are ongoing.

More recently, he argued he should be allowed the right to silence in the form of claims to privilege over documents seized by the ATO, with the matter yet to be determined.

For the ATO, barrister Elizabeth Bishop SC complained about delays to the case as a result of the various challenges brought by the EY partner.

She said since the original statement of claim was first lodged in August, the accused’s lawyers foreshadowed they would file a request to strike parts of it out in September but have not yet done so.

“Here we are again in a situation where one is being foreshadowed again,” she said.

Ms Bishop said “all the energy so far” has been devoted to challenging the outcome of suppression order requests, which have been rejected but appealed multiple times.

“We’re very concerned about the delay in circumstances where all of our evidence is on,” she said.

Ernst and Young outed itself in November last year as the big four firm where the ex-partner — who was sacked in August 2022 — worked when he allegedly carried out the tax exploitation scheme for some of his former clients.

The ATO claimed he had received more than $700,000 in allegedly “unauthorised” financial benefits from the tax scheme. He was terminated from the firm after he allegedly disclosed this to EY.

The man is being sued by one of his former clients in the NSW Supreme Court, claiming repercussions from the ATO due to the scheme.

The matter will next be heard on August 13 so parties can argue on amendments to the statement of claim and strike out claims and privilege claims.