Phoenix Companies under scrutiny
Phoenix companies are now the target of a coordinated interagency taskforce between the NSW Office of State Revenue and other state revenue bodies and the Australian Taxation Office.
What is a Phoenix Company?
A phoenix company is where a new company is created or established to continue the business of a company that has been liquidated by its owners in an effort to avoid paying its debts such as payroll tax, income tax, employee entitlements, superannuation, creditors and other liabilities of the company.
Both the NSW Office of State Revenue and the Australian Taxation Office are now working together with other Commonwealth revenue agencies in an attempt to identify individuals and entities who engage in illegal phoenix activities and seek recovery from them and their related entities.
Phoenix activities impact on all persons and entities involved with the liquidated company including its employees, contractors, business suppliers, ATO and state government revenue agencies.
Suppliers to the liquidated company miss out because they are left with unpaid invoices which flows on to impact on their business and those other businesses who are legitimately trading and attending to their statutory and regulatory requirements.
When a new company is established and takes over the business of the liquidated company, the new company has the benefit of not having to comply with dealing with the liquidated company’s debts and liabilities.
Revenue agencies such as ATO and the NSW Office of State Revenue miss out on monies due by the liquidated company that are due and payable.
Revenue Agencies also have additional costs of recovery and enforcement to investigate and locate phoenix activities and often are unable to recover from the liquidated company.
If you believe you are the victim of a phoenix arrangement, please call Quinn Lawyers and we can assist you with advice as to the alternatives available to you including setting up trading arrangements where any client provides personal guarantees to limit the risk of unpaid debts.
If you require any assistance in relation to a Phoenix Company under scrutiny, please do not hesitate to contact our team of Lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.