Unregistered tax agent gets 10 days in jail, $80,000 fine

The judgement came after it was found Mr Williams contravened the act by preparing and lodging returns after his tax agent registration lapsed on 1 December 2018, only weeks before a TPB decision to terminate his registration, effective 8 January 2019, was going to come into effect.

The court heard that the TPB had investigated Mr Williams’ actions as a tax agent between August 2017 and January 2018 after it had received complaints from clients that claimed he had received their tax refunds but had not promptly forwarded the money.

In June 2021 the TPB commenced legal action against Mr Williams and also sought an injunction, which was approved on 18 June 2021, precluding him from preparing and lodging tax returns for taxpayers for a fee or reward while unregistered.

The court found that between 1 July 2019 and 23 September 2020 while unregistered Mr Williams lodged one or more tax returns for 51 taxpayers for fees that ranged between $50 and $400.

Approximately 73 returns were prepared and lodged by Mr Williams with fees for his services totalling $7,300. 

Mr Williams was also found to have prepared and lodged seven income tax returns for four different taxpayers during July 2021, which Mr Williams admitted, which was a further contravention of the TAS Act and also contempt of the court order. 

The court found that Mr Williams’ actions were not caused by a “mere lapse of judgement” but rather that he had consciously ignored the requirements of the act even after it was made known to him that his wrongdoing had come to the TPB's attention. 

Justice Charlesworth said the financial penalty needed to be one that expressed the severity of the contravention. 

“There is a need in the present case to impress upon Mr Williams that contravening the TAS Act is not a solution to his financial difficulties but will only serve to exacerbate them.” 

“The imposition of a financial penalty will of course be a source of additional financial hardship, but that is a consequence contemplated by the TAS Act itself.” 

After agreeing to the injunction which further barred him from preparing and lodging tax returns for a fee, Mr Williams was also found guilty of engaging in conduct constituting contempt by breaching it, which resulted in a 10-day prison sentence.

“I do not consider the imposition of a fine to be an adequate punishment for the contempt, even if the evidence was sufficient to show that Mr Williams had the capacity to pay,” said Judge Charlesworth. 

“As the present case shows, there is a class of persons (of whom Mr Williams is one) who are prepared to take considerable risks in contravening the law even where the chance of detection is very high.” 

“The deprivation of personal liberty is a serious consequence and it is for that reason that I consider the term of imprisonment should be short, but nonetheless sufficient to impress upon Mr Williams the importance of compliance with orders made under the TAS Act that buttress the regime, and to discourage conduct that undermines the court’s authority more generally.” 

Shared from Accountants Daily