We were recently referred a client who had a Director Penalty Notice problem. They had been one of two directors in a company which hadn’t paid superannuation.
Lockdown Director Penalty Notice for superannuation
Because they hadn’t paid superannuation or lodged SGC Statements they were automatically liable for the company’s superannuation. The ATO had quantified the superannuation and issued our client with a lockdown Director Penalty Notice. The ATO can do this when superannuation is not paid and SGC Statements are NOT LODGED within one month of super being due for payment.
The amount claimed by the ATO in their lockdown Director Penalty Notice was over $300,000.
What were our client’s options?
Unfortunately, the other director of the company was already bankrupt. This meant that our client was liable to the ATO for the full debt of over $300,000.
Our client had no means to realistically pay this debt or otherwise avoid bankruptcy. So, she therefore unfortunately had to file for bankruptcy. Whilst our client wasn’t happy to have to do this, at least it released her from her debts including the ATO’s debt for superannuation.
What should our client have done?
Our client should have:
- Caused her company to lodge SGC Statements when it couldn’t pay superannuation. If it had done this, then our client could have used liquidation of the company to avoid any Director Penalty Notice debt; and
- She should have gotten advice at an earlier stage. Our client’s company had lots of employees but it still took over a year to accrue the large super debt it owed. Our client should have contacted us earlier and we could have helped her with solutions to avoid bankruptcy and perhaps even liquidation.
Contact us for assistance
If your company is having difficulty paying its debts, then you should urgently get professional advice about what you should and can do. This can help avoid the type of situation in this article. And TAX DEBT SOLVED can help. So, please contact us for a free, no-obligation consultation, here.