(07) 3232 5200 practice@palco.com.au
ATO giving final opportunity for indebted Directors
The tax office has issued an estimated 50,000 letters to directors of companies. The letter advises if company directors do not take action to engage with the ATO and start repayment plans then director penalty notices may be issued. This will create a personal liability for directors if they do not comply with the options set out in the director penalty notice.
Early intervention
It is critically important that contact is made with those directors in your client base who may potentially receive such a letter. The letter would have been sent to the directors’ home address as per the ASIC records and therefore, unless the director has been in contact, you may not be aware of the letter being issued.Early intervention to rectify the company’s position is vital if the business is to survive. One of the traps that can occur is entering a repayment arrangement without proper analysis of how the company arrived at its current financial position and what remedial steps need to be taken to return the company to profitability.
Seek Specialist Advice Early
With early intervention and appropriate strategic advice, most underperforming businesses can be turned around and improved, providing positive cashflows for owners and ensuring their long-term sustainability.Our philosophy is that a formal insolvency should always be the last resort, however experience tells that most people only seek specialist insolvency advice at the last minute which often leads to the inevitable liquidation of the company. Early intervention and seeking specialist advice can lead to the business being successfully turned around without the need for formal insolvency appointments. It may in some cases be appropriate to enter into Safe Harbour to avoid the risk of insolvent trading which is far better than a formal appointment of an administrator or liquidator.
Contact P A Lucas for Assistance
The informal turn around or Safe Harbour intervention would be considerably cheaper in costs than a formal appointment of an administrator or liquidator. In addition, it allows the directors to stay in control while obtaining specialist advice. Our experience suggests that Informal Turn Around appointments or Safe Harbours are around 70% to 90% cheaper than the cost of an External Administration, depending on the level of involvement required by our industry experts.
The effect of Business Failure
Below is our Business Failure graph. Businesses do not fail overnight but slide into insolvency over a period of time. In most cases the curve is not as smooth as in the graph, but it occurs over time. The purple line indicates the level of stress and mental anguish that directors will go through as the business slides into insolvency. That level of stress and anxiety increases overtime as the financial performance decreases.
Business Failure Graph
Two known facts are that financial failure is one of the main causes of relationship break down and is also a very common cause of adult suicide and mental health issues.Accordingly early intervention can be of great benefit to your client’s mental wellbeing and personal relationships.
Use Our Free Business Survival Diagnostic
We have over 40 years’ experience presiding over 1000s of businesses. We are experts in business turnaround, insolvency, liquation, administration; managing cashflows and advising people how to improve the cashflow of their businesses.We understand distressed business and know the importance of cashflow to the business and how to generate cash quickly. We use our years of experience in managing distressed businesses.Experience has shown us, with early intervention, businesses in financial distress can be turned around and again become profitable adding value to the economy.
Call Us
We offer a free 30 minute assessment to any business.