This could be a company or business owing a large sum for tax or GST to the ATO, or where the company has defaulted on a previous arrangement, or the offered arrangement has been refused.

Appointment of a liquidator or voluntary administrator may not be the best option, especially if the business is trading profitably, or where this may create potential problems for the directors with loans or guarantees.

These are the strategies and steps we usually work through:

- Review the company's circumstances with directors.

- Determine whether the company can trade profitably in the future, consider steps to improve profits, and prepare realistic forecasts for profits and cash for at least twelve months.

- Consider the risks to directors, such as the liabilities under personal guarantees or Directors Penalties (unreported PAYG Withholding and Super).

- Work through options:

                   arrange finance for working capital

                   refinance debt

                   negotiating payment arrangements with creditors

                   implement trading improvement strategies (more sales, more profit, reduced costs)

                   sale of the business, or part of it, and/or sale of surplus assets

                   appointment of a liquidator or administrator

Negotiating With the ATO

The ATO's Annual Reports show that it receives less than 5 ¢ in the dollar, so if it can get a better result, it will listen.  By the way, there is no 'best' way, every situation is unique.

We estimate the likely return from liquidation, and also from a payment arrangement as turnaround strategies have effect.  We ask for a reduction in the interest and penalties.  If the offer of an arrangement is accepted, the profit improvement strategies must be addressed immediately.  The ATO will expect regular payments, probably monthly, and likely reject long term or deferred instalments.

Monitoring

The ATO is only interested in being paid and meeting its legal standard of care, so it is up to the directors to ensure the money is available every month.  Apart from the negotiations with the ATO, we can assist with the forecasts of profit and cash, preparing financials every month to compare actual to forecast, proposing strategies to increase sales and reduce costs, and keeping directors accountable (the things that have to be achieved, the date for completion, who is responsible for which tasks).

If you think you may have a problem, call us and we'll look at the options with you.  Once legal action starts, any arrangement becomes more difficult.