It may be quite engaging to run a company, but some challenges come with the process, particularly when it gets to a point where the company hits the rocks financially. One of the most dreaded experiences a company director encounters is receiving a Director Penalty Notice (DPN). It can of course be quite a nerve-wracking experience, however, to know that there are solutions such as that of company liquidation are available, does calm the stress somewhat.
What is a Director Penalty Notice (DPN)?
A Director Penalty Notice (DPN) is a legal notice sent to directors of a company who have not complied with its tax liability particularly Pay As You Go (Withholding) Pink Slip and Super Garnishee. The notice pegs directors to take full responsibility for the tax liabilities of their firms, in case the position must be cured within the above section stated period. Failure to respond to a DPN can lead to severe effects such as being financially destroyed. It is where the option of company liquidation comes into play as the possible solution.
Why Quick Action is Essential
If you have a DPN, then certainly you should act quickly and efficiently. When a client receives a notice of An amount due, he or she is afforded 21 days to either pay the outstanding tax debt or engage in an action, such as a payment plan. If the director does not act the ATO can force collection against the debt against the director directly this can entail wage garnishee or asset seizure. However, conducting within those 21 days provides some form of legal immunity.
In what way can liquidation assist?
Company liquidation is another way of coming out of a DPN position and reducing the pressure in dealing with a failing business. Voluntary liquidation makes it possible for the directors to properly wind up the company’s affairs sell its assets and pay creditors. Notably, this can prevent the creditors from pursuing any legal means any further, and eliminate or reduce an individual’s monetary exposure resulting from the DPN.
The Role of Registered Liquidators
Furthermore, through company liquidation, company directors gain an opportunity to deal with registered liquidators who understand the process and the legalities surrounding it. These people make sure that things are done properly, this relieves the director when he is under pressure.
Conclusion: Take Control of the Situation
Therefore it can be concluded that the receipt of a Director Penalty Notice is highly likely to result in corporation penalty and is a matter of great concern. There is a large threat of the shareholders being held personally liable but there is also the option of company liquidation when the company is in a financially bad state, protect its shareholders and shareholders’ assets, and tie up the loose end of the Vieness company in an orderly manner. Timing and proper choice of contacts do make a difference as to how the events turn out.
If you are experiencing a cash flow problem and you have received the DPN, do not despair; liquidation may be what you need.