Complaints to the TPB generally relate to the code of professional conduct, which includes requiring agents to exercise reasonable care in relation to their knowledge of a client’s state of affairs and ensuring that tax rules are applied correctly in relation to a client’s circumstances.
A bulk of the complaints about tax agents made to the TPB are in relation to the competency of service they provide - but this is not the case with the BAS agent population.
In fact, when it comes to BAS agents, the number of complaints about the competency of service are “very few,” particularly in relation to the complaints fielded about tax agents, the chair of the TPB, Ian Taylor, told The Bookkeeper.
Overall, there are 1600 complaints per year. Of those approximately 1200 come from consumers, approximately 300 are referred from the ATO, and approximately 100 come from the practitioner population.
The TPB looks over 77,000 agents in total, with the BAS agent population making up for about 20 per cent of that. Of the 1600 complaints which span all practitioners, Mr Taylor reported that the number of complaints against BAS agents is “very low” by comparison.
“From our perspective we are very happy in terms of where BAS agents are at right now,” Mr Taylor said.
“Historically this was an unregulated profession, and there was no requirement prior to 2010 for these people to be registered. So having gone through that transition from an unregulated environment to now having all these BAS agents registered with and regulated by the board, that’s a much better place to be in than we were seven years ago,” he said.
“BAS agents, throughout that process, have towed the line and done everything that has been asked of them,” he said.
Last year the TPB launched a major compliance project targeting unregistered service providers, which recently saw almost 3,000 BAS service advertisements identified as needing further analysis. Over 400 of the advertisements appeared to be advertising BAS services provided by an entity not registered with the TPB.
“We did institute this program on the basis of feedback we have received from professional associations about a significant number of unregistered providers out there. The board is very keen to ensure that we create a level playing field and that indeed those people who are registered meet the education requirements, the experience requirements, the professional indemnity [insurance] requirements and the continuing professional education (CPE) requirements,” Mr Taylor said.
“That whole process has meant we have seen a very significant reduction in the number of advertisements that are out there for unregistered entities,” Mr Taylor said.
The program has now been scaled back, however, Mr Taylor stressed that referrals and complaints about unregistered activity can still be referred to the TPB.
A number of cases have been escalated to the federal court, with some wins in recent years. One case saw a registered BAS agent fined over $81,000 for filing income tax returns for clients without a tax agent registration, and another fine was issued to a person and his company for approximately $900,000 for providing and advertising tax agent services without the appropriate registration.
Areas of focus and guidance
Mr Taylor advised that item of attention for the TPB is ensuring that agents seek appropriate client authorisation for all lodgments with the ATO.
“When a document is lodged with the ATO on behalf of the client, the requirement is for them to have approval by their client to lodge the document. Although this isn’t widespread, we have seen examples where that rule is not carried out to the nth degree,” Mr Taylor said.
“In some circumstances, where instead of having a specific authority in respect of each document they lodge, they might try and get from their clients a general authority. That isn’t sufficient,” Mr Taylor said.
The TPB also “highly recommends” that agents, particularly BAS agents, use letters of engagement with their clients. These are not compulsory from the TPB’s perspective, although they may be mandated by some professional associations.
“It enables practitioners and the client to better understand each person’s obligation in relation to the engagement between two parties, and reduces likelihood for complaint between the two parties, particularly where the client thought the agent was going to do something that the agent had not agreed to,” Mr Taylor said.
“We do find that BAS agents may not use as many engagement letters as other practitioners, for example,” he said.
Mr Taylor also advised that there is guidance set to be released from the TPB which addresses professional indemnity insurance for tax practitioners.
“What is not covered ordinarily by a professional indemnity insurance policy is first party damages. In other words damages specifically to the agent, their assets, their equipment, their business, their continuity,” Mr Taylor said.
“One of the things we’re looking at is potentially recommending, not forcing, but recommending, that agents consider whether or not they should take out optional first party cover. So, in other words, protect themselves from the business continuity perspective in the case that they do have a cyber attack,” Mr Taylor said.
“With BAS agents, many of them are sole traders, and very few would actually employ IT specialists who would be there to help them get back on track,” he said.
“We are likely to come out shortly with something along the lines of suggesting, without making it mandatory, that it could be money well spent to have coverage in that respect.”