What the DPN Warning Letters Don't Say That You Need to Know
Our phones have been running hot with calls from accountants, and directors, who have received “Warning of possible director penalty notice (DPN) for an unpaid company debt” letters. The letters warn of possible personal liability if company directors don’t take action. The problem is that the ATO are not clear about the full range of options available to directors. The only options they present are:
- pay the outstanding amount, or
- enter a payment plan.
But there are two main things the ATO don’t say in their letter.
Firstly, Payment Arrangements are now much harder to get! The ATO will usually now want to see financial statements and are often seeking guarantees to back the arrangement. These requirements can be deal breakers for many directors.
Secondly, the other big option the ATO has left unsaid, is that there are formal insolvency options that also work to prevent a DPN. Let’s work through that.
If your client received one of these warning letters, your first, and most important, question to consider is: Were the debts properly reported? That is, did the company lodge it’s BAS statement (for PAYG or GST), or Superannuation Guarantee Charge Statement within 3 months of the due reporting date. If the answer is yes, they have options other than those stated on the letter.
If the debt was properly reported, we can stop the DPN by putting the company into:
- Liquidation – For companies that no longer trade or need to close.
- Small Business Restructuring – For companies with total debt under $1 million, that want to continue by forming a deal with creditors. This option allows directors to stay in control of the company.
- Voluntary Administration – For companies with total debt over $1 million, that want to continue by forming a deal with creditors.
Why Choose Dissolve?
- We specialise in Low Cost Liquidations for small companies.
- We’ll do a creditors voluntary liquidation on a small company with no assets for $5,000.
- We’re efficient. We ran a test on a selection of liquidations and found the average small company liquidation is finished in 12 months. Dissolve’s average is five months.
- We offer free, confidential phone advice.
Please feel free to pass our number on to your clients, or we are happy to have a conference call with you.