A former partner at PwC has been banned from practising as a tax agent in Australia for two years in a scandal involving the sharing of confidential information about government plans to target multinational tax avoidance with the firm’s clients.
Peter-John Collins, who was head of international tax for PwC’s Australian office, was a member of an advisory group involved in confidential discussions with Australia’s Treasury department about introducing laws targeting multinational tax avoidance and a diverted profits tax.
Mr Collins, a 30-year industry veteran who won the Tax Institute of Australia’s corporate tax adviser of the year award in 2016, shared information about the proposed laws with other PwC staff in Australia and overseas despite signing strict confidentiality agreements over the Treasury discussions in 2013, 2016 and 2018.
Some of that information was later disclosed to PwC clients and potential clients, according to the Tax Practitioners Board (TPB) industry watchdog, which on Monday deregistered Mr Collins as a tax agent in the country for two years.
The TPB also ordered PwC to improve its processes and training around potential conflicts of interest.
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Australia has claimed in recent years to be “leading the global fight against multinational tax avoidance” with legislation introduced in 2016. The Australian Tax Office (ATO) has, however, been frustrated in its attempts to crack down on multinational tax avoidance, and by the role that accounting firms have allegedly played in protecting their clients from the laws.
Mr Collins, who could not be immediately contacted, left PwC last October.
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Max Bruce, an accounting lecturer at Australian National University, said the TPB’s ruling was indicative of problems with the “cosy relationship” between Canberra and the Big Four consulting firms, which advised the government on the tax avoidance laws. He said the Labor party government of prime minister Anthony Albanese, which was elected in May, had moved to reduce its reliance on consultants for its policy development.
Mr Bruce added that placing a former senior PwC partner under sanctions was a blow to the sector’s reputation. “It doesn’t reflect well on the industry at all,” he said.
A PwC official said the firm acknowledged that Mr Collins had not complied with confidentiality agreements with the Treasury and that the company should have had specific conflict management procedures in place to prevent it from happening.
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“In each case, this failed the standards we set for PwC and we deeply regret this occurred,” the firm said.
The ATO said: “Clients and the community expect tax practitioners to provide high-quality advice, and to hold themselves to high professional and ethical standards of behaviour. Most tax practitioners do the right thing. However, it is important that those practitioners who fail to meet their ethical or professional obligations are held to account.”
The ATO noted that the Big Four adopted a new governance standard, the large market tax adviser principles, last August, in conjunction with the ATO and TPB.
Ian Klug, chair of the TPB, said: “Tax practitioners who breach this confidence will not be tolerated. Rules to manage conflicts of interest are equally important in protecting client interests, especially in a large firm.”
Mr Klug added that leaking information from confidential legal reform discussions “might be seen to elevate personal and commercial profit, breaching public interest, legal and ethical obligations”. – Copyright The Financial Times Limited 2023
