For a large number of companies, the ATO is a major creditor. This can often result in serious consequences, including the ATO:
- Claiming general interest charge and penalties, which will increase a company’s tax debts;
- Issuing Director Penalty Notices which make the directors personally liable for the company’s PAYG Tax and superannuation;
- Issuing Garnishee Notices to the company’s bank(s) or debtors requiring them to pay funds held on behalf of or payable to the company to the ATO; and
- Commencing legal action to place the company in liquidation.
What Should Company Directors Do
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.
Examples of Successful Negotiations with the ATO
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:
- We assisted a large transport company negotiate its 9th payment arrangement with the ATO. This related to debts totalling several hundred thousand dollars and included the ATO writing off interest and penalties which it had charged.
- We provided advice and assistance to a group of civil contracting companies. This included assisting to negotiate a payment arrangement with the ATO. And the ATO also withdrew an application it had made to Court to liquidate the company.
- We assisted a company’s directors negotiate a payment arrangement with the ATO in respect of very significant amounts claimed by the ATO. The ATO was claiming debts owed by the company and also its directors as a result of Director Penalty Notices issued.
- We have on numerous matters assisted a company’s accountant put forward a proposal for a payment arrangement to the ATO. We do this where we consider that it is warranted for the accountant to do so, rather than the company engaging us to make the proposal.