The ATO says that – with almost a third of small businesses considering shutting up shop – it is prime timing for salons to be targeted by unqualified individuals presenting as pre-insolvency advisors, offering inappropriate advice or illegal phoenixing activity, whereby a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements.
ATO assistant commissioner George Montanez said: “Phoenix activity normally follows economic activity. Unfortunately, we’re anticipating an increase in untrustworthy advisors hitting the market to encourage these businesses that are struggling, to do the wrong thing. They are out there in normal times, but with the number of businesses that are expected to be in trouble as a result of COVID-19, we’re anticipating and we’re preparing [for an increase].”
The ATO advises that signs of a dodgy advisor include:
- Cold-calling with offers of advice;
- Unsolicited correspondence after court action by a creditor;
- Advice to transfer assets to a third party without payment;
- Refusal to provide advice in writing;
- Suggestions they have a sympathetic liquidator who will protect personal interests/assets;
- Advising that certain records be withheld from the bankruptcy trustee or liquidator; and
- Suggestions they deal with the liquidator or trustee on a business’ behalf.
An insolvency guide for directors is available from the Australian Securities and Investments Commission website here.
Visit the #BEAUTYSTRONG hub at https://professionalbeauty.go-vip.net/beautystrong/
For more news and updates, subscribe to our weekly newsletter