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Independent Review of TPB Makes Reference to R&D Tax Practitioners

Regulation of the tax profession is the responsibility of the Tax Practitioners Board (TPB) which was formed following the Tax Agent Services Act 2009 (TASA)’s introduction.

An independent review into the effectiveness of the TPB has been undertaken over recent years, and this week the final review report has been released, following earlier consultations and publications of a discussion paper.

Within the final report, reference is made to Tax intermediaries: of which R&D Tax Advisors are specifically named.

The review report states that:

•  Research and development (R&D) tax advisory specialists or consultants provide a service to businesses regarding activities that may be eligible for tax incentives. Many R&D advisors also assist in the completion of claims. The EM specifically recognises that advising or assisting an entity on tax concessions for expenditure incurred on R&D activities are tax agent services, where the service involves the application of the taxation laws;
•  As Research and development (R&D) tax advisory specialists have a role linked to a tax outcome as a primary factor of their services, R&D specialists should be registered with the TPB;
• The Review recommends establishing a basic principle that if a tax intermediary is regulated or monitored by a Government agency (other than the TPB) then there should be no need to also register with the TPB;
• The Review recommends that:
  • Only those tax intermediaries that are not regulated by any other Government body should require registration with the TPB, despite otherwise being required to be registered with the TPB.
  • The TPB should have the power, through the legislative instrument process, to exclude certain other services from having to register with the TPB.

As R&D Tax Advisors are not currently regulated by any other Government Body, regulation by and registration with the TPB is to remain a requirement for the profession following the implementation of any recommendations of the review.

A significant recommendation of the review includes an expansion of sanctions available to the TPB to deal with practitioner misconduct. Proposed new sanctions include disbarment from the tax profession, enforceable undertakings, assurance audits, suspensions, and external intervention to wind up a practice.

A complementary recommendation put forward by The Small Business and Family Enterprise Ombudsman’s review of the R&D Tax Incentive published in late 2019 called for the ATO to collaborate with the TPB to investigate R&D Advisors, who as registered tax agents have breached the Code of Conduct or Tax Agent Services Regulations 2009, and that potential claimants be notified of such disqualified practitioners.

The R&D Tax Incentive has been a focus of the TPB and ATO over recent years, with several published matters involving concern over R&D Tax Advisory services, including the Amede, Bogiatto and Birdseye matters.

Swanson Reed supports any measures that maintain the integrity of the R&D Tax Incentive and the profession.