Major consulting firm partner bid for secrecy amid ‘significant’ misconduct allegations

A former major consulting firm partner is trying to suppress his identity amid accusations of spruiking tax loss access schemes.

The case in the Federal Court comes as the tax adviser profession faces intense regulatory scrutiny.

A former partner of a major consulting firm has been accused of committing “significant” misconduct as a tax practitioner.

The Australian Taxation Office has alleged the man, who is still a legal practitioner and registered tax agent, of promoting tax loss access schemes to different clients between November 2016 and April 2021, according to a judgement delivered by Federal Court judge Geoffrey Kennett.

Justice Kennett noted the former partner had argued his reputation would be damaged if his identity were revealed.

“(The respondent) relies on the damage to his reputation among clients and prospective clients (and consequent commercial damage) which he is concerned may arise from disclosure of the nature of the allegations against him,” the judgement read.

“The prospect of such damage is obvious. He is accused of significant misconduct as a tax practitioner.”

The ex-partner’s legal counsel Peter Bruckner and Danielle Woods had argued the commissioner of taxation cannot apply for an order against an entity in relation to a scheme more than four years after they last engaged in the conduct, the judgement noted.

But legal counsel for the ATO argued the ex-partner allegedly promoted the schemes until April 13, 2021.

As well, if the case is dismissed there would be no finding on the actions the partner was accused of and he would not have an opportunity to defend the allegations.

Judge Kennett also noted the former partner suffered immense anxiety and stress and had consulted a psychologist, but this was not sufficient to put in place an ongoing suppression order to avoid unacceptable risks to his health.

There are related proceedings involving the former partner underway in the NSW Supreme Court where he is being sued by some of the people he allegedly promoted the schemes to, the Judge Kennett said.

“Clearly there is a significant factual overlap between that case and the present one,” he said.

Justice Kennett said a third respondent in the matter proposed to file submissions in support of an application for a possible further suppression order by October 27. But no application was filed.

Ultimately, an application for ongoing suppression and non-publication orders was dismissed. But the former partner is seeking leave to appeal that decision.

The case in the Federal Court comes as the tax adviser profession faces intense regulatory scrutiny in the wake of revelations PwC Australia used confidential government briefings to shape strategies for clients.

However, the firm involved in the case with the ATO is understood not to be PwC.

PwC used confidential tax briefings to construct partnership models for major tech clients, under the banner of Project North America, to respond to new tax laws set to be introduced in 2016.

The ATO explored using its powers under the tax promoter penalty laws to punish PwC for its schemes, before ultimately deciding against the move.

However, the furore surrounding the PwC scandal has seen the government intervene, moving in September to significantly increase the penalties associated with the tax promoter laws, introduced in 2006.

Proposed laws would give the ATO broader powers to punish companies and accountants under tax promoter penalty laws.

This would broaden the definition of promoter to also capture companies that receive benefits from the promotion of the scheme as well as expanding the coverage of the laws to cover schemes that breach the multinational anti-avoidance law or diverted profit tax rules.