Please explain letters: the short road to de-registration

I've seen a troubling new phenomenon in the past few months that I need to share. Granted, these are just cases I've seen and heard of, and so it may have been the Board's strategy for some time, but I've only started to see the prevalence of it more recently.

One of the base requirements for a person to be registered as a tax agent or BAS agent under the Tax Agent Services Act is that the person is a "fit and proper person" (s 20-5 TASA Act). If you don't meet that requirement, then the Board can't register (or re-register) you as a tax agent or BAS agent.

So, what I have recently started to see is that the Board is making decisions to de-register accountants off the back of a "Please Explain Letter". The Board simply concludes the accountant fails to meet the requirements of being "fit and proper". And that's it. De-registration ensues.

I've included a picture of what it looks like below.

As you see, the letter is simple and innocuous. It's usually 2-3 pages long, maybe 4. It hardly looks like the next step is de-registration. I've included a picture of the relevant question below.

There's no investigation process at all and this catches accountants by surprise.

There's also no "position paper" style report/brief that usually accompanies the Board's process if there's a formal investigation of the accountant under s 60-95 of the TASA. In effect, the accountant isn't forewarned that the Board intends to de-register them (unlike as is usually the case in an investigation). To be clear, the accountant is told that de-registration is an option, but it's not obvious from the letter that such outcome will be applied to that accountant's specific case.

Those who are de-registered simply receive a notification out of the blue from the Board's registrations area that their registration has not been renewed. The only next step is to then appeal the matter to the Tribunal, with all the challenges that entails.

If I am right, the "Please Explain Letter" and the application of the "fit and proper person" requirement really are the short (and ruthless) road to de-registration.

If you get one of these letters, all I ask (for goodness sake!) is get proper advice and respond properly. Unfortunately, second chances are limited.

Give me a call to find out more: + 61 3 8644 3522.