The ATO is warning taxpayers who may be thinking about pausing, changing or closing their business, due to the current economic conditions, to be wary of untrustworthy advisers who may recommend inappropriate or illegal behaviour.
This could include illegal phoenix activity, where businesses intentionally remove their assets prior to winding up so that they can be used in a copy of the original business.
Red flags include:
- people the taxpayer doesn’t know cold calling with advice;
- unsolicited letters, emails or phone calls after the taxpayer has been through court action with a creditor;
- advice to transfer assets to a third party without payment;
- refusal to provide advice in writing;
- advice suggesting they have a sympathetic liquidator who will protect the taxpayer’s personal interests and assets;
- advice to withhold certain records from the bankruptcy trustee or liquidator, or provide incorrect information to authorities; and
- advice to deal with the liquidator or trustee on the taxpayer’s behalf.
The ATO instead recommends anyone thinking of pausing, changing or closing their business to contact a qualified professional, such as an accountant, lawyer, or registered liquidator.
We encourage all our business owner clients to get in contact with us before making any decision regarding pausing, changing or closing their business 1300713733.