Regulators are often criticised for tackling the smaller fish in the accounting and taxation pond, and that makes the termination of former PricewaterhouseCoopers’ partner Peter Collins’ tax registration interesting.
Collins was pinged by the Tax Practitioners Board (TPB) for failing to keep confidential the details of consultations on tax laws being conducted by the federal Treasury, which he was required to do under the confidentiality agreement signed with the government department.
A TPB investigation of Collins’ conduct found the former PwC tax guru had shared with the firm’s tax partners and staff information he had obtained during confidential consultation processes with government departments and bodies.
These consultations are related to multinational tax laws.
“Mr Collins received confidential information and documentation during the course of his participation in consultations with Treasury (as a member of the Base Erosion and Profit Shifting (BEPS) Tax Advisory Group and on legislation and policy positions intended to give effect to the Organisation for Economic Cooperation and Development (OECD) BEPS provisions, including the Multinational Anti-Avoidance Law (MAAL), the Diverted Profits Tax (DPT) and Hybrid mismatch rules),” the TPB said.
That sharing of information even if it took place within the accounting firm is considered a breach of the confidentiality agreements signed by Collins in 2013, 2016, and 2018 because an individual must not disclose material to others outside the consultation process without getting permission from the commonwealth.
A similar circumstance unfolded with the consultations Collins took part in with the Board of Taxation. Rinse and repeat.
The firm was also pinged, being told it needed to ensure that it had risk-management processes in place to properly manage conflicts that would arise from people receiving confidential information from the government.
“Some tax practitioners are involved in confidential law reform discussions, to share their wisdom and experience and to support the public interest”, Ian Klug, the TPB chair, said. “Leaking confidential information in these circumstances might be seen to elevate personal and commercial profit, breaching public interest, legal and ethical obligations.”
This case highlights several important issues that relate to the way in which government consultation processes are run.
The first is the fact that there are certain kinds of people who see complex global transactions that have corporate law, accounting, and taxation issues best described as a ‘tad hairy’.
A government needs to understand what is happening in practice and how best to manage legislative reform to tighten tax laws.
Senior partners in accounting firms are usually the people who see these transactions and the issues that arise from them on a daily basis. They are the best source of that feedback and as such the bureaucracy will lean on them for their insight.
Government departments rely on confidentiality agreements to ensure that people involved are engaging in good faith in order to help get problems with tax laws ironed out, and not using the engagement with the government to a firm’s marketing advantage.
There are also times when government departments have required two or more individuals to sign off on a confidentiality agreement in order for members of a policy team to be able to view a draft bill or participate in a discussion.
Public servants should be able to rely on those undertakings in order to be able to speak freely and honestly with experts in the hope that any feedback helps them improve the quality of legislation.
The TPB’s actions in terminating Collins’ registration and also making an order against PwC that forces the firm to report to the TPB over a two-year period demonstrates a couple of things.
A regulator has shown it is unafraid to tackle a major accounting firm on an issue and in doing so the TPB has sent a message to tax practitioners from firms of all sizes that compliance with the Code of Professional Conduct needs to be taken seriously by everybody irrespective of size.
Another key impact of this disciplinary action is that there is now a known cost for breaching a confidentiality agreement that must be signed in order to get privileged access to information to be able to provide authoritative feedback to a government body or department.
Experts of all kinds will think twice — even three times — before passing information on to colleagues who have not been authorised to receive it if they realise that their ticket to earn a quid — their tax or other statutory registration — will be under threat.
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Victorian tax agent loses registration after practitioners board gets tough
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