Ron Pattenden's hell at hands of the taxman | The Australian Page 1 of 2
Ron Pattenden's hell at hands of the taxman
• by: Susannah Moran
• From: The Australian
• January 14, 2012 12:00AM
Ron Pattenden spent eight years battling the Australian tax office over a tax debt of $15 million, later reduced
Source: The Australian
BUSINESSMAN Ron Pattenden remembers when the tax officers moved in to deal what they thought
was a killer blow. They knew about his fleet of luxury cars, worth $9 million. How could he, having
arrived in Australia virtually penniless, afford such expensive cars?
For Pattenden, who collected number plates, not cars, the exchange would have been laughable -- if it weren't
Pattenden, who has spent the past eight years fighting the Australian Taxation Office, was hit with a departure
prohibition order, banning him from returning to his home in New Zealand and faced tax bills that reached
But after years of declaring his innocence and taking on the ATO through the courts, Pattenden has secured a
succession of victories. His $15m tax bill has been reduced to zero. The DPO was lifted by a judge, and a final
win occurred late last year. "Eight years has taken its toll," says Pattenden. "I went to nine stone, I had
shingles . . . it's what they do to you, physically and mentally, it's the stress, the despair."
Pattenden has spent more than $1m on legal costs, as well as huge sums on accountants and travel. He is angry
the ATO has had an "open chequebook", courtesy of the taxpayer, with which to pursue him.
"It has got to be changed. They have got a job to do, let them do their job, but let them do it fairly, legally,"
Ron Pattenden's hell at hands of the taxman | The Australian Page 2 of 2
The Commonwealth Ombudsman launched a probe into Pattenden's case, and questioned tax officials. He is
waiting for the report and is angry at how he has been treated."People shouldn't have to go through this," he
says. "The ATO should have shut my file up years ago."
Originally from Britain, Pattenden ran pubs in London before arriving in Australia. He launched a fund to pay
for funerals for members of the Aboriginal community, who would make payments to the fund and whose next
-of-kin would receive a benefit when the member died. But Axa, the insurance company backing the fund,
pulled out in 2001 and others would not back him. Pattenden's accountants, KPMG, recommended he set up a
company in Vanuatu where capital of $200,000 was needed -- rather than the $5m Australian authorities
Premiums from the member fund began being paid to Crown Services in Vanuatu, which in turn started paying
out on the claims.
But the initial $200,000 transaction to set up Crown was recorded by Austrac, as were subsequent money
flows, and the tax office began asking questions.
"They got all the Austrac records of all the money going from here to there and it was a fair bit," says
Pattenden. "They tracked from Australia to Vanuatu -- but they didn't look for any money coming back."
In 2006, after two years of answering the ATO's questions, only to receive further requests for information,
Pattenden, his accountants and lawyers had a face-to-face meeting with the tax office, hoping that would be the
end of the matter.
When confronted with the accusation of $9m worth of cars, Pattenden lost his temper -- and informed the tax
officers he collected number plates -- but there was no fleet of luxury cars attached. Pattenden left the meeting
feeling the issues had been sorted out but in late December was hit with a $4.5m bill.
Worse was to come. Pattenden arrived in Australia in May 2008 to meet his lawyers, as he had done many
times before, only to be told he couldn't leave the country until the tax bill had been paid. The tax office had
slapped a DPO on him. "It took five months and $260,000 to drag it through the Federal Court," Pattenden
says. "My life was in utter turmoil."
The ATO believed Pattenden had recently sold racehorses and two "luxury apartments". But, it turned out the
horses had been sold four years earlier (at a loss), one unit had been sold to repay a bank debt and the other was
still owned by Pattenden.
The judge lifted the DPO and the tax office was ordered to pay Pattenden's court costs. After being allowed to
leave the country, Pattenden was at the airport when his name was called over the loudspeaker. The tax office
had issued a new DPO and the Australian Federal Police were ready to escort him off the tarmac. But the tax
office quickly backtracked and had withdrawn the DPO by the time the matter came before the Federal Court.
Judge John Logan was unimpressed and said that if there had been "deliberate defiance" of the court's earlier
order then -- if proved -- it would likely result "with a term of imprisonment for the officer concerned and for
those who counselled or procured that course".
Pattenden says the ATO should not be able to issue a DPO without first going to a judge to get it approved --
so that others do not have to suffer as he did. He also plans to set up a website, to help others.
"It's so, so wrong, they are destroying families, destroying businesses. I won't let it go."
The ATO is prevented from talking about individual taxpayers due to privacy legislation.