Arthur Athanasiou

Tax Agents and ATO formal interviews – playing with fire!

Arthur Athanasiou

September 26, 2018

ATO Tax Agents

I’ll admit to the glamorisation of the role of a legal practitioner following television shows such as “Suits”. Let me tell you; being a lawyer is nowhere near as glamorous as the role portrayed by Harvey Specter’s character, but sometimes I think that some tax agents also think of themselves as glorified lawyers, especially when it comes to attending formal ATO interviews.

The ATO has the power to conduct formal interviews of any person in the administration of the tax law, and it’s an offence to refuse to attend or answer. The interviews aren’t conducted for anyone’s amusement. They’re important weapons in the Commissioner’s arsenal, and are usually recorded and the interviewee is usually under oath or affirmation when being interviewed. Apart from an assertion of client legal privilege, all questions must be answered truthfully.

The problem is that some tax agents think this is all “run of the mill”, and don’t need the assistance of an experienced legal advisor to represent and assist them. Maybe they think they can handle anything put to them by the ATO without the assistance of an experienced professional. Maybe it’s my training as a lawyer, but there are things that should be said and sometimes, a question is so leading that it just doesn’t deserve to be answered without clarification about what is actually being asked.

So, I’ve been presented with a transcript of an interview by the ATO with a tax agent who chose, either through ignorance or hubris, to attend the interview alone to discuss his role in his client’s financial affairs, and how he prepared the Trust’s financial statements in prior years. There was some controversy about the existence of loan accounts, and how prior year amendment requests sought to reclassify salary expenses as loans due from a beneficiary. Needless to say it wasn’t an elegant exercise and was bound to come to the Commissioner’s attention.

At the commencement of the interview, the ATO officers (there were three of them) reading from a script cautioned the tax agent and used terms such as, “offence under section 137 of the Criminal Code Act”, “section 8D of the Taxation Administration Act”, “legal professional privilege”, “privilege against self-incrimination”. The next question the ATO officer asked is “do you have any questions about the process today?” Although the transcript can’t reflect facial expressions, I suspect a rather sheepish look was on the tax agent’s face who replied “Not as yet”!

But the climax of the five hour interview was the following proposition by an ATO officer put to the tax agent as a question:

“Okay. I guess, just in conclusion, I think it’s self-apparent that there are a number of contradictions that we’ve been battling to reconcile. I guess without jumping to any conclusions, because we will step back and consider what you’ve said, but I guess it’s my inclination not to change my views, but I’d like to give you the opportunity to provide any further comments in respect of the evidence you’ve given today.” 

Wow! Words fail me on how this could even be considered as being a proper question to be put to an interviewee. That said, the response was just as disjointed and meaningless, but there was a “no” in there somewhere.

The transcript is peppered with passages where an experienced practitioner would’ve interjected to decipher precisely what was being asked and to assist in responding to a question, which might be asked in different ways on separate occasions by different ATO officers.

In this case, answers were provided that make me feel uncomfortable for the tax agent involved, and could easily support a formal complaint being made to the Tax Practitioners Board.

My point is that formal interviews are serious matters and can’t be treated lightly. If you are a tax agent and receive a notice to attend to give a formal interview, advise your client to obtain legal advice and more importantly, get your own independent legal advice!