The Australian Taxation Office has released a guide, including a video, advising businesses on the signs of these scams.
The ATO reminds businesses that if they are insolvent or struggling to pay debts, it’s important to seek specialist advice from a qualified and registered insolvency practitioner as soon as possible and the wary of inappropriate insolvency advice that could lead to illegal phoenix activity.
The guidelines set out insolvency advice to watch out for including the fact that registered liquidators and trustees will provide clients with sound insolvency advice that they can rely on.
“But some insolvency advisers suggest actions designed to help directors avoid paying their creditors and create new companies to continue on without debts,” the guidelines stated.
“This is illegal phoenix activity and can result in serious penalties. Following this advice could put you at risk of a fine, criminal conviction or even a jail term.”
Businesses should be wary if an adviser contacts them with advice, especially after any creditors have taken court action or suggests transferring assets to a third party without payment.
They should also be suspicious if an adviser offers advice on restructuring the business to avoid paying debts or other obligations or offers a fee based on a percentage of debt or obligations.
Additional red flags include an adviser suggesting they know a liquidator who will protect your personal interests or assets or a valuer who can undervalue any assets and asks that clients provide incorrect information to authorities.
If a business is experiencing difficulties, it’s important to take action and get advice straight away. ASIC has advice for directors whose companies are in financial difficulty or insolvent.
If a business needs to wind up its company or restructure, a registered liquidator or registered trustee will be able to help.
The Phoenix Taskforce is working to stop people from promoting or engaging in illegal phoenix activity.
