Beware of fraudulent BAS clients

Sophisticated criminals are now targeting accountants and registered tax agents to lodge fraudulent business activity statements on their behalf. In some cases, the accountants have picked up the fraud before lodgement. In other cases, it’s gone undetected until they are contacted by the ATO or Tax Practitioners Board about the fraudulent BAS return and payment.

The common themes include:

1. A new client approaches an accountant and wants to deal 100% online as they are overseas, on holiday, in another state, etc.
2. Proof of identity via a driver’s licence or passport is provided (but it’s a fake or stolen identity document).
3. The requested BAS return shows a large tax refund.
4. All the bank statements, tax invoices, etc., provided are perfect copies of original documents (but just altered and fake for this client).
5. The client requests that the BAS return be lodged for an honest company or client (but the ‘real’ client doesn’t know someone is lodging a false BAS return on their behalf).
6. The client requested that the current bank account listed on the ATO Online Services be changed to their fraudulent bank account.

Tax agents who have lodged a fraudulent BAS return (even if they have done everything correctly) can have problems/issues with the ATO and Tax Practitioners Board.

To reduce the risk of this occurring, tax agents should:

1. Ideally, meet all new clients face to face. If this is impossible, they should do a Zoom meeting with them to verify their identity (and record and save the Zoom meeting).
2. Send an ethical letter to the previous accountant/tax agent to verify that the client is moving accountants and has not just had their identity stolen. Do not proceed with any work for the client until a response from the previous accountant is received.
3. Be very suspicious of new clients getting big GST tax refunds (this is a red flag you cannot miss).
4. Request a copy of the previous year’s financial statements and tax returns (which can be checked against the ATO records of their prior year’s taxable income).

Accountants and registered tax agents need to be aware they are firmly in the sights of criminal fraudsters.