If your businesses has been impacted by the coronavirus pandemic, it may have incurred debts which it cannot pay, including tax debts. Alternatively, your business may have had a tax debt prior to coronavirus, but now things have gotten worse. TAX DEBT SOLVED can help in both situations, just contact us here.
If you have a business tax debt, here are six things you can do to help solve your problems:
1. Get Expert Advice
If you have an unmanageable tax debt, the best thing you can do is get professional advice. At TAX DEBT SOLVED, we are able to advise you on:
- Risks to you as a director of a company; and
- Solutions to help you solve your tax debt problems;
2. Understand Your Company’s Financial Position
You need to know what you owe, to who and when the major bills are going to fall due plus how much they are going to be. Look especially at rent, loans, tax and major suppliers. You also need to check who owes you money and if they’re going to be able to pay. Making sure your books and records are up to date is also critical in protecting you later if things get worse.
Even if you are unable to pay tax, you must lodge BAS shortly after they are due and if you cannot pay superannuation you must lodge Superannuation Guarantee Charge Statements. This will help you avoid being personally liable for these debts if your business is traded through a company, under the ATO’s Director Penalty Notice provisions.
3. Lodge Activity Statements and SGC Statements
Company directors can be liable for a company’s PAYG Tax, GST and superannuation tax liabilities. This is as a result of the ATO’s Director Penalty Notice provisions, which we have explained in detail here. However, importantly company directors will be automatically liable for:
- Unpaid PAYG Tax and GST, if Activity Statements are not lodged within three months of being due; and
- Unpaid superannuation, if SGC Statements are not lodged within one month of superannuation being due for payment.
It is therefore important that you lodge Activity Statements and SGC Statements if you cannot pay PAYG Tax, GST or superannuation. This will help in avoiding personal liability for these debts.
4. Communicate with the ATO
You or your accountant needs to be communicating with the ATO. Even if this is just telling the ATO that you cannot currently pay your tax debt, but you are working on a solution or a proposal to get the tax debt paid. If you need assistance with this, we can help.
Communicating with the ATO can help as:
- It can delay the ATO taking recovery action such as issuing Director Penalty Notices, Garnishee Notices or liquidation proceedings; and
- The ATO can be more likely to engage with you in the future if you have been communicating with them in the past.
5. Negotiate an ATO Payment Arrangement
You should, as quickly as possible, look at negotiating a payment arrangement with the ATO. In the current financial situation, the ATO is open to negotiating long term payment arrangements, even in some cases with the first payment not being required for a number of months.
So, it is better to be seeking a payment arrangement now, even if you are not proposing to pay the ATO until you think things will improve for your business.
6. Consider a Formal Insolvency Appointment
In some cases, a business cannot be saved or it is not financially warranted to save a business. In these circumstances perhaps liquidation of your company is an option. If you place your company in liquidation you can always look to start a business again, but without the residual liability which your company may have.
Alternatively, you could consider voluntary administration of your company to help it recover from its current circumstances. The objective of voluntary administration is generally to allow a company to continue trading and to enable its business, property and affairs to be administered in a way that maximises the chances of the company continuing in existence.
Contact us for Assistance
If your company is having difficulty paying its debts, then you should urgently get professional advice. And TAX DEBT SOLVED can help. So, in these circumstances please contact us for a free, no-obligation consultation, contact us here.