The ATO has been making it known that disruption of illegal phoenix operations is a key agenda item for the Commissioner of Taxation. It looks like those words have turned to action and for the time being their focus is off the pre-insolvency adviser! Tax Agents are the primary target.
On 2 August 2018 tax agents were subject to raids on 11 separate premises located in Melbourne and Shepparton. The raids involved more than 250 ATO officers. The rarely used formal “access without notice” powers are only undertaken when entities fail to engage with the ATO and where there is a risk that records will be hidden or destroyed.
The tax agents are part of a larger group of “agents of concern”, according to statement released by the Australian Tax Office, who have come to the attention of the ATO on suspicion of facilitating illegal phoenixing and encouraging tax avoidance of GST, income tax and PAYG withholding on millions of dollars in income.
The ATO has reported that the action follows concerns raised by other tax professionals, complaints from clients and from the ATO’s own intelligence suggesting that they have been scrutinizing compliance of the tax agents and clients of interest for some time.
Evidence gained from the tax agents records can be used in action against the agents and their clients. The cache of records must have been expected to be substantial to warrant 250 officers being involved in the raid. The raids, no doubt, will have some Melbourne and Shepparton business-owners/directors waiting for the ATO axe to fall.
Shaw Gidley expects that this is the beginning of the ATO showing they mean business regarding illegal phoenix operations, and that the spot light will shortly be cast on NSW where the majority of most insolvent liquidations occur.