The ATO says they are sending lots of DPNs – is it true?
The ATO recently announced they sent 18,500 Director Penalty Notices in 2022.
You may remember they also said they sent DPN Warning Letters (so not actual DPNs) to 52,319 directors in April 2022. Our experience from speaking to many directors who received those warning letters was that they were always for properly reported ATO debts, so only ever at risk of receiving a 21-day DPN, not a lockdown. This makes sense – the ATO were helping taxpayers who have played by the rules as much as possible by reporting their debt even if they couldn’t pay it.
The ATO reported that about one in four who received the Warning Letters took notice, got in touch with them and formed a payment arrangement.
The assumption in the media has been, that those who didn’t engage are the 18,500 who received DPNs. We know that the situation is not nearly that simple because:
- A large percentage of the 18,500 will have received Lockdown director penalties – so they probably weren’t one of the 52,000 who received warnings.
- We have been in conversation with many directors that received the Warning Letter, have done nothing in response and still today have not received a DPN.
- At their peak the ATO said they were sending 30 to 40 DPNs per day. To send 18,500 in one year they would have to send 50 per day, all 365 days of the year.
We noticed a surge of DPN related calls around July and August 2022 but by October they had stopped. These patterns are mirrored by national insolvency statistics which saw peaks in July and August and a 25% drop in appointments from September to October.
It appears the ATO debt pursuit machine stirred to life for a few months last year but it has gone quiet again.
Our feeling is there are a lot more DPNs that the ATO could send but have they have not yet done that.
So, what does all that mean? We think that in 2022, the ATO threatened a lot, did issue some DPNs, but we remain sceptical that they have issued as many as they say. But, there are a lot of directors that remain at risk of receiving a DPN.
They are likely to start going out when the ATO get tough on debt pursuit again.