Pearce & Heers is proud to provide the following advisory services:
We have assisted numerous company directors negotiate payment arrangements with the ATO, including in circumstances where the ATO has initially refused further payment arrangements prior to our involvement or where the ATO has commenced legal proceedings to place the company in liquidation.Find out more >
We provide advice, guidance and assistance to company directors in respect of strategies which can be implemented to turnaround a company’s business so that it may trade profitably in the future.Find out more >
We assist companies and individuals settle debts which they owe or legal claims against them which they cannot pay. If successful, this results in a company avoiding liquidation or a avoiding bankruptcy.Find out more >
We provide advice and assistance to company directors who have received Director Penalty Notices, either by assisting with the liquidation or administration of a company so that the director avoids liability, or through conducting negotiations with the ATO for a payment arrangement to pay the debt owed.Find out more >
We specialise in providing general advice and assistance to individuals with financial problems and directors of insolvent companies or companies facing financial difficulties.Find out more >
We can assist the directors of a solvent company wind up the company by way of a members’ voluntary liquidation in order to maximise the return to the company’s shareholders and/or in order to arrange for the ASIC to deregister the company.Find out more >
For a large number of companies, the ATO is a major creditor. This can often result in serious consequences, including the ATO:
It is important for companies which fail to pay their tax debts to be proactive in dealing with the ATO. If negotiations are not commenced regarding a payment arrangement, the ATO is more likely to take recovery action.
We commonly assist directors deal with debts owed to the ATO. Often this involves putting a proposal to the ATO for a payment arrangement including asking the ATO to reduce interest and penalties.
We recommend that company directors are proactive in dealing with the ATO. However, we also provide assistance where a company has significantly overdue tax debts. This includes where the ATO has already taken recovery action.
We assist in negotiating numerous payment arrangements for companies with the ATO each year. Some of the matters we have successfully dealt with in the past are as follows:
Many business owners do not know the break-even point for their business and do not adequately focus on the key drivers of profitability. This is a significant opportunity for consulting work for accountants to assist directors with:
We provide advice, guidance and assistance to accountants and company directors in respect of strategies which can be implemented to turnaround a company’s business so that it may trade profitably in the future.
In some circumstances we may also be able to assist businesses in negotiating arrangements so that debts owed to creditors may be paid over time or coming to arrangements with creditors to compromise their debts. Such arrangements can assist a business with immediate cash flow problems by reducing or deferring current liabilities.
An insolvent company may agree to sell its business to another entity with the insolvent company to then be placed into liquidation at some point in the future. Such a sale may either be on the open market, if possible, or to a new entity, which may be related. If the sale is to a related entity then the sale ought to focus on a company’s core business / assets with a view to the new purchasing entity being in a position to trade profitably.
In any sale of a business or assets a company’s directors must comply with their duties, which include acting in the best interests of the company and all stakeholders. Where a company cannot pay its debts, directors’ duties also include having regard to and acting in the best interests of the creditors. To ensure compliance with a director’s duties, any sale of a company’s business and assets ought to be entered into for fair value and on commercial terms. This is particularly important in circumstances where a sale to a related entity will not enable all debts of the company to be paid and it is likely that the company will be placed in liquidation at some point in the future.
If a sale is not transacted for fair value and on commercial terms it may disadvantage creditors and give rise to breaches of director’s duties, recovery claims by a liquidator and offences being reported to the ASIC, which may subsequently prosecute directors. This conduct is commonly referred to as “illegal phoenix activity”, however, the ASIC recognises that there is a distinction between “legal” and “illegal” phoenix activity depending on whether the issues of value and commerciality are adequately addressed in the sale. Accordingly, proper legal and accounting advice ought to be obtained to ensure that sale arrangements are properly structured and do not give rise to “illegal phoenix activity”. In this regard there has recently been a significant growth in the number of “fringe advisers” who provide advice regarding financial difficulties but are not qualified insolvency practitioners and are unregulated. Certain of these advisers have been associated with “illegal phoenix activity” and this issue is under scrutiny from the ASIC and the ATO which are looking to pursue prosecutions in this area.
The benefits of a sale of business to a related entity may include the directors maintaining control of the business rather than an administrator or liquidator taking control, continuity of the business in the transmission to the purchaser and the directors have the opportunity to communicate and manage dealings with clients, employees, suppliers and financiers.
There are a number of issues to be addressed in a sale of a business including:
In some circumstances individuals or companies that are unable to pay all amounts which they owe to creditors may be able to negotiate debt settlements or arrangements with some or all of their creditors in order to avoid bankruptcy or liquidation.
Pearce & Heers specialises in assisting to negotiate these types of debt settlements and informal arrangements. The approach we commonly adopt is we provide creditors with a full summary of an individual’s or company’s financial position often with an estimate of the position should that party enter into a formal insolvency appointment, which assists creditors understand that a person or company cannot pay their debt in full. We will then generally make an offer of settlement to creditors on that person’s or company’s behalf and subsequently liaise with their creditors regarding the offer, any counter-offer received and if negotiations are successful in preparation of a settlement agreement.
When creditors understand an entity’s financial position and the prospects of recovery should that entity enter into a formal insolvency appointment, they may often be open to negotiating a settlement of their debt for a lower amount, reducing the interest on their debt for a period, or allowing deferred payment of their debt.
Informal arrangements can be proposed quickly and efficiently, however they require acceptance of the proposed settlement offer by each of a person’s or company’s creditors (or possibly the vast majority of creditors) to be successful. If one or more creditors reject a proposed offer the informal arrangement may not be able to proceed. Consequently, proposing such arrangements is more difficult as the number of creditors increases.
Additionally it is generally more likely for this process to be successful if a person or company is able to make an offer to creditors for a significant portion of their debts, although this may not always be necessary.
In considering whether to undertake this process, company directors and individuals must be aware that not all such informal matters will result in a successful outcome, however, it may be a better strategy than an immediate formal insolvency appointment.
If you would like to discuss the options available to you, including negotiating informal settlement arrangements, please contact us for an initial obligation free consultation.
We are often approached by individuals or companies that are subject to legal claims or proceedings, or those parties’ solicitors, in circumstances where the individual or company is unable to continue funding the litigation or meet the amount of any judgment which has been obtained or which may be obtained in the future.
Pearce & Heers specialises in assisting individuals and companies resolve litigation and disputes with a commercially-minded approach, which may often benefit both parties to the dispute. As with the negotiation of general informal arrangements with creditors, we commonly do this by providing the other side to a dispute with a summary of an entitles financial position, along with details of any estimated future costs to that entity of defending claims against it and a summary of estimated outcomes should the entity we are acting for be forced to make a formal insolvency appointment.
Whilst there is obviously no certainty of achieving a settlement through this process it provides a further option for parties who are subject to litigation to consider in circumstances where they cannot afford to continue to fund the litigation or meet the amount of any claim against them and it may result in settlement of disputes on commercial terms.
We have recently successfully assisted numerous individuals and companies enter into informal arrangements and settlements with their creditors, including in respect of the following matters:
The ATO can issue a Director Penalty Notice to recover a company’s unpaid PAYG Tax, GST and superannuation from a company’s directors.
There are two types of Director Penalty Notice the ATO can issue. They can apply as follows.
A company is required to:
Where a company doesn’t pay PAYG Tax, GST or superannuation, but it lodges its BAS within 3 months of being due and SGC Statements when due, the ATO can issue a Director Penalty Notice to the company’s directors. If this happens directors can be liable for the PAYG Tax, GST or superannuation claimed. However, directors can avoid personal liability if:
“Lockdown” Director Penalty Notices apply where a company doesn’t pay PAYG Tax, GST or superannuation. And also doesn’t lodge BAS within 3 months of being due or SGC Statements by required dates. If this occurs the directors are automatically liable for PAYG Tax, GST or superannuation and:
In May 2019 legislation was passed to change the date which a company must lodge SGC Statements for directors to avoid being automatically liable for SGC debts. The dates for lodgement of SGC Statements to avoid liability are now:
If you become liable under a Director Penalty Notice the ATO will treat the debt as it would treat any ordinary tax debt . The ATO can and will:
If a company has multiple directors, the ATO will often target its recovery action at the director it considers has the best ability to pay. The ATO will have information on a director’s personal financial position based on the director’s past Income Tax Returns.
The following tips will help you avoid liability under Director Penalty Notices:
If you are liable under a Director Penalty Notice then:
The ATO can issue a Director Penalty Notice to a director who was a director at the time when unpaid PAYG Tax or superannuation was incurred, but who has subsequently resigned.
The ATO can also issue a Director Penalty Notice to an incoming new director. Whilst the director is liable immediately the ATO cannot issue a notice until the director has been in office for more than 30 days.
A company’s director will have a defence to a claim by the ATO under a Director Penalty Notice if they can establish that:
Given the serious consequences a Director Penalty Notice may have it is important that you urgently obtain advice if your company is unable to pay PAYG Tax, GST or superannuation.
At Pearce & Heers we commonly provide pre insolvency advice and assistance to company directors and individuals. The areas we specialise in include the following.
We provide pre insolvency advice to directors of insolvency companies regarding the liquidation process and any risks associated with placing a company in liquidation. In appropriate circumstances we can also advise directors on business sales and legal phoenix transactions. Where we provide advice to a director which we consider excludes us from acting as liquidators we will, if required, assist the director in arrange another insolvency practitioner to be the liquidator.
We also provide pre insolvency advice to individuals who wish to file for bankruptcy. This includes assisting people become bankrupt and either appointing a trustees from Pearce & Heers or appointing the Official Trustee from the Australian Financial Security Authority.
We are often contacted by accountants whose clients are in financial difficulty who either want to generally discuss their client’s circumstances and issues or who may wish to arrange a meeting with us where we can formally review an individual or company’s position and discuss the options which may be available.
We will generally have an initial discussion or consultation with an accountant at no cost to their client and will be up front with any costs which we may charge for any additional or specific work which we may perform for their client in the future.
If you are the director of a company or an individual facing financial difficulty we can review your circumstances and advise on options available. This includes reviewing any risks which may arise, future strategies and possible formal or informal insolvency appointments.
We can then, if necessary, either provide further assistance in dealing with financial problems or administer a personal or corporate insolvency appointment.
We commonly assist company directors or bankrupts deal with issues which may arise with a third party liquidator or trustee who has been appointed. This may include:
We have advised numerous company directors who have received director penalty notices regarding the options available to them. This includes placing the company in administration or liquidation, entering into a payment arrangement with the ATO, or solutions.
We are experienced in conducting negotiations with the ATO regarding payment arrangements for individuals and companies and we negotiate numerous payment arrangements with the ATO each year.
We are often asked to review a company’s circumstances and provide either general or formal advice on the company’s current solvency or future risks. In these circumstances we often also advise company directors regarding future strategies which may be implemented to improve a company’s financial position or to deal with its creditors.
We provide general advice and assistance to companies or individuals who are subject to large claims by creditors which they cannot pay. To do this we review relevant circumstances and financial information and come up with a strategy to solve the problem. This may include seeking to negotiate an informal settlement or payment arrangement or assisting with bankruptcy or liquidation.
Where a creditor has taken formal recovery action by issuing a company with a Statutory Demand and possibly subsequently a Winding up Application, we can provide assistance with reviewing a company’s financial position, considering risks to the company’s director and formulating a strategy to deal with the claim being pursued. This may include negotiating a payment arrangement so a creditor adjourns or withdraws the Winding up Application, appointing a voluntary administrator, or letting the company be wound up if there is limited or no prospect of the company continuing trading.
The shareholders of a solvent company can place it in liquidation by way of a members’ voluntary liquidation. This can help distribute the company’s funds in a tax effective manner.
To commence a members’ voluntary liquidation, the majority of a company’s directors must resolve that the company will be solvent (that is able to pay its debts in full) within 12 months after the commencement of the liquidation. This resolution is commonly referred to as a declaration of solvency.
Once a company’s directors have made the declaration of solvency, the company’s members may wind up the company. This is done by way of a members’ voluntary liquidation by passing a special resolution at a meeting of members that the company be wound up in this manner. The company’s members must be given at least 21 days’ notice in writing of the meeting. For a special resolution to be passed at least 75% members entitled to vote and be present at the meeting must vote in favour of the resolution.
A special resolution can also be passed if all members sign a written resolution resolving that the company be wound up. If the is able to occur it avoids the necessity to convene and give notice of a meeting of members.
The winding up of the company will commence upon the making of the special resolution by members.
The role of the liquidator is to:
Winding up a solvent company through a members’ voluntary liquidation may have the following benefits:
A members’ voluntary liquidation will be finalised when the liquidator holds a final meeting of the company’s shareholders. The meeting is convened after all amounts owed to creditors (if any) have been paid and any surplus funds have been distributed to shareholders. The company is deregistered by the ASIC three months after the final meeting is held.
We have conducted many members’ voluntary liquidations and can provide advice and assistance in regards to carrying out the process. We generally provide this service for a fixed fee except in the most complicated matters.
If you wish to obtain advice regarding members’ voluntary liquidations, or appoint any of the qualified staff members of Pearce & Heers as liquidator of a members’ voluntary liquidation please contact our Brisbane or Gold Coast office.
Our team looks at our client’s entire financial picture from an insolvency expert’s perspective to identify opportunities to resolve financial difficulties so formal liquidation or bankruptcy can be avoided.
After doing a detailed financial analysis and presenting all possible solutions, we factor in the client’s goals and financial needs to come up with the best course of action to try to minimise negative outcomes.
We understand financial difficulties are stressful. That’s why the Pearce & Heers team makes every effort to use their knowledge, experience and a positive approach to make the process as stress-free as possible.
While we do everything possible to help a client avoid liquidation or bankruptcy, sometimes that’s the most viable option. We are experts in administering formal insolvency appointments and ensure every detail is handled professionally and efficiently.
Because we focus on what’s best for our clients and offer a full range of advisory services few insolvency accountants offer, we’ve been able to get more favorable results for those who entrust us with their, or their client’s, financial challenges.
We care about our clients’ circumstances and results, we always act honestly and with integrity and we will always tell things as they are even if it is not what a client wants to hear.
Our goal is to minimise the impact of insolvency and to make the process as easy as possible for our clients. We are always professional, discreet, efficient and handle every situation with the utmost respect for our clients and those with whom they do business.
We assist with everything from creating and implementing business turnaround strategies to administering formal insolvency appointments. We’re happy to offer a free initial consultation so you can discover what’s possible.