Tax practitioner, a direct competitor of another practitioner, makes a frivolous and vexatious unsupported claim to the TPB

Tamara is a registered tax agent in a large well-known accounting firm. Max, a registered tax practitioner in another leading accounting firm known to be in direct competition with Tamara’s firm, recently took over one of her clients, actively seeking out the client engagement. Tamara was unhappy to have lost this client as they were a ‘big client’ and she had only recently joined the firm and was keen to make an impression.

Tamara overhears a discussion between colleagues at her firm regarding the client’s change in firms, and the fact that it had come as a surprise to the firm given the rumours that had been circulating that Max had been involved in fraudulent tax claims of substantial monetary value.

Tamara does not make any further enquiries to substantiate the rumours she has overheard. However, she decides to report a significant breach of the Code to the TPB anyway, seeing this as a potential opportunity to ‘get back’ at Max. Although it would be reasonable for Tamara to conclude that a fraudulent claim involving a substantial sum of money would be considered a significant Code breach (despite not having expertise in criminal law), she does not turn her mind to whether it meets the relevant test.

Tamara doesn’t consider the consequences of lodging such a report or the lack of evidence she has to substantiate it, focussing instead on her personal motives.

As the breach relates to the conduct of another registered tax practitioner, Tamara uses the TPB Complaints form to lodge the report. The information accompanying the breach notification provides very little detail about the breach and contains a number of statements that do not appear to be supported.

On receipt of the report, the TPB undertakes a preliminary analysis of it to assess and validate the purported breach and determine whether Tamara has ‘reasonable grounds’ for believing there has been a significant breach of the Code by Max. 

The TPB makes initial enquiries with Tamara regarding the background to the purported breach, the circumstances in which she became aware of it and the nature of the relationship between the parties in an attempt to substantiate the claim. It becomes very clear during these communications that she is basing her view solely on the hearsay, speculation or the unsubstantiated opinion of her colleagues. The history to the takeover and competition between the firms may also have a bearing on the credibility of the notification made and increases the potential for it to be vexatious. She did not make any further enquiries to verify or corroborate the rumours she heard, nor did she have any independent evidence.

The TPB also does not have any information to indicate that Max has a history of non-compliance with the TASA, including the Code, or the taxation laws more broadly.

As the breach notification has not been sufficiently supported with appropriate facts and evidence, and the TPB is not satisfied there are reasonable grounds for the belief that there has been a significant breach, the TPB treats the claim as frivolous and vexatious. The TPB decides not to commence a formal investigation regarding Max’s conduct in response to the report.

TPB records show that Tamara recently lodged another breach notification in relation to a purported breach of the Code by a colleague within the same firm. The notification was also treated as frivolous and vexatious due to a lack of appropriate facts and evidence to support it.

Given the circumstances surrounding these breach notifications, and concerns that Tamara may not be acting honestly and with integrity by making these frivolous and vexatious claims, it is likely that the TPB will take steps to investigate Tamara’s conduct.