Forum Topics Personal Accountant ?Gardening Leave
SebastianG
Added one year ago

I'm a lawyer but this is not specific advice to your circumstances. I would recommend seeking your own legal advice if you are very concerned about it.

Your former accountant likely has a restraint clause as part of his employment contract or the Partnership agreement if he were a Partner.

Generally speaking, this prohibits him from soliciting your business at his new firm. However, as others have pointed out, you are his client and you are free to make your own enquiries as to his whereabouts and seek to transfer your services to his new firm. Depending on your accountant's risk profile or his confidence in the restraint, he may agree to take you on as his client at his new accounting practice or he may politely decline to do so if he is worried about his previous firm suing him for breach of contract.

In reality, restraints are quite difficult to enforce. They generally follow a 'cascade' which starts at the highest level (i.e. he made be restrained from taking all clients in Australia) and Courts tend to view the harsher restraints as unenforceable. The same is true if his restraint was valid for a period of time (again it would cascade, 12, 9, 6, 3 months etc).

You might have seen Andrew Leigh in recent months talk about how the ALP are looking to do away with restraint clauses because it prevents the freedom of movement and stifles competition. So the current trend in the law is definitely to read these clauses down and in any event, you would not be in trouble, your accoutant would be for taking you on at his new firm.

In relation to private rulings, again, I am not a tax lawyer, but if you paid for the private ruling, you would likely be entitled to a copy of it. If it was a private ruling that was obtained by the firm generally and they have deemed your circumstances to be consistent with the ruling, that might be a different story. In any event, the ATO is not necessarily bound by private rulings so you cannot solely rely on it anyway.

Again, none of the above is legal advice and is general in nature only.

Cheers and goodluck.

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Aaronfzr
Added one year ago

Hi all,

Apologies if this is too far removed from the purpose of this forum; @Strawman please delete if necessary.

My accountant has unexpectedly left their firm, with very opaque information from the firm itself. Indeed, the PA had been organising meetings for them as of Monday this week (now Thursday), and the firm principal emailed me yesterday to reply to an email "while xxx is absent". Meanwhile, the accountant themself texted me today that they are no longer employed by the firm, and directed me to the firm principal.


For context, my accountant has arranged a moderately complex and aggressive tax strategy. Is the apparently sudden departure, and opaque communication, a red flag re; the firm And/or strategy? I'm guessing either they have messed up badly, or have suddenly resigned to change roles / start a new firm.

Any tips on how to navigate new relationship with the principal and clarify the situation? Am worried that if there are professional issues then my own strategy may be under question.

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Strawman
Added one year ago

Gosh @Aaronfzr, sounds like a difficult situation.

Others in the accounting sector may have more specific insights, but I think the approach depends largely on what you mean by 'aggressive.'

If the strategy is fully compliant with tax laws, you likely have nothing to worry about. However, if there’s a risk it might not align with ATO guidelines, it’s worth noting that the responsibility ultimately lies with you as the taxpayer -- even if you were following professional advice. Unfortunately, ignorance isn’t usually a defense in these cases...

There could be many reasons for the accountant’s sudden departure, but you’re certainly entitled to a clear and candid explanation from the firm. I’d try as best you can to push the principal on the situation and seek reassurance regarding your strategy.

If they’re not forthright or you feel uneasy about their answers, it might be worth seeking an independent review of the strategy. Legal action could be an option if you suspect misconduct, but that’s likely a last resort and something to discuss with a lawyer if it comes to that.

Hopefully, the principal will be transparent and supportive in addressing your concerns.

Best of luck.

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Solvetheriddle
Added one year ago

@Aaronfzr id be worried, time to be a bit aggressive and get some answers and guarantees at the least. as a client you have the right to know whats going on.imo

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Aaronfzr
Added one year ago

Im assured the strategy was legit, and backed up by a private ruling the firm had sought from the ATO. Ive seen a legal opinion supporting this view (albeit one procured by the accounting firm). To that extent, my strategy should be independent from that one practitioner.

However, that potentially binds me to the firm as the owner of this private ruling. If I left my strategy may not have the protection of that IP.

Seeking independent legal advice re; the strategy is a good idea.

I sent a polite query to the principal without saying all that I know, will be very interesting how forthright the response is

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BendigoInvesto
Added one year ago

The firm is not the owner of this ruling, the entity that applied for it is the recipient of the ruling, that being your entity.

The ATO usually makes a private ruling in response to an application by, or on behalf of, a particular entity. So whilst the accounting firm may have the document from the ATO regarding the ruling, it applies to your entity, and you should be able to find it and use it no matter who your accountant is.

You can find the tax rulings on the ATO database:

https://www.ato.gov.au/single-page-applications/legaldatabase

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