Tax Office halved $1.4m PwC fine for false privilege claims

afr.com:

The Tax Office’s secret settlement with PwC in March shaved $785,400 off penalties and blocked any further action against the big four firm and its clients for making false claims of legal professional privilege over an estimated 100,000 documents.

Last November the ATO imposed $1.428 million in penalties on PwC over 170 false LPP claims, but the confidential settlement reduced this to just $642,600. The agreement also prevents the ATO from taking action against five multinational clients who supported the false legal professional privilege claims.

Second Commissioner Jeremy Hirschhorn: “We put rigorous controls around settlements”. Alex Ellinghausen

The Tax Office had previously agreed it would not issue penalties against PwC over LPP claims involving a sixth client, Brazil-based meat group JBS, to expedite a Federal Court challenge of the claims.

A redacted copy of the deed – published as part of the Ziggy Switkowski report into the PwC tax leak scandal – reveals a string of new details about the settlement, which was signed by a senior tax officer on March 17.

This coincided with strenuous efforts by the ATO that week to prevent the Tax Practitioners Board from releasing copies of PwC internal emails that showed multiple partners, including the head of international tax, Peter Collins, leaking confidential Treasury information.

ATO Second Commissioner Jeremy Hirschhorn told the Senate consultants inquiry on June 7 that “we were frustrated through large claims for legal professional privilege on behalf of clients”, but the ATO did not disclose the confidential settlement until PwC told the inquiry of the agreement on July 26.

The disclosure of the deal was “symptomatic of the secrecy that surrounds the relationship