Question

Len is Maud’s accountant. He has been visited by an ATO officer who demanded to see all his files and other materials (including electronic computer files) regarding Maud’s financial affairs. The ATO officer also told him that he wants Len to answer some questions about Maud’s affairs generally. He has also told Len that if the files need further investigation he wants to take them back to the ATO with him. Len is very concerned because he knows that his files contain some highly sensitive documents.

Some relate to the valuation of a business that Maud is negotiating to buy. They are clearly marked “Commercial-in-Confidence” because they show that the price the seller is asking is well below market value. If they become public before Maud can close the deal it is likely that the price will increase.

They also include letters from Maud’s solicitors providing advice about the legality of a family trust that Maud wants to establish to allow her to distribute income from her business to other members of her family.

Finally, they include a letter from Maud setting out details of a similar arrangement that she had in previous years which Len knows was illegal.

Explain whether Len can refuse the ATO access to his files at all (without a search warrant), whether he has to help the ATO officer identify the relevant files from all the records in his office, whether there are any specific grounds on which he can refuse access to those documents about which he is really concerned, whether he is obliged to answer any questions about Maud’s affairs at all and whether the ATO can take away any files they identify as being “of interest”.

[Total for Question: 5 marks]

Answer 1

Explain whether Len can refuse the ATO access to his files at all (without a search warrant)?

Len cannot deny the ATO to have access to the files that are required by the ATO. When ATO exercise there accessing powers they are entitled to enter any premises and remain in the premises until they have the information what they need. If Len deny to give them files that are required by the ATO or stop them from searching the information, this may lead to prosecutions and penalties.

Whether he has to help the ATO officer identify the relevant files from all the records in his office?

Yes, she has to help the ATO in accessing the files that are required at that time. As per the law the ATO must be helped in searching the required information. If any way an obstruction is created this must be followed by prosecutions.

whether there are any specific grounds on which he can refuse access to those documents about which he is really concerned, ?

NO Len cannot deny the sharing of the information about the deal that is not yet finalized, an ATO may need the information’s about the transactions that are not yet carried in the year but they may have impact on the future of the business. This will help the ATO to analyses the trend or any other implications out of the transaction if carried.

Whether he is obliged to answer any questions about Maud’s affairs at all?

The accessing powers of the ATO are governed by the legal professional code of conduct and hence Len can deny giving such personal information about the Maud’s affairs.

Whether the ATO can take away any files they identify as being “of interest”.

NO ATO cannot take away the files even if the files are marked as being of interest. The ATO is only authorized to take a backup or photocopy of the documents that are marked as of being interest.