Pay the Debt in Full
Paying the Debt in Full seems the most obvious way of complying with a Director Penalty Notice but even this strategy has its risks.
If you pay the tax debt pursuant to the Director Penalty Notice and your company is later placed into liquidation, the liquidator will as part of the liqudiation process, scrutinise all payments made to creditors in the six (6) month period immediately preceeding liquidation. As a consequence, he may attempt to clawback any unfair preferential payments.
Payments made by a company following the receipt of a Director Penalty Notice may be considered preferential and able to be clawed back by liquidators.
If the liquidator takes action to recover such payments made to the ATO, the ATO can and will then seek the reimbursement of any moneys they are forced to disgorge from the directors personally.
This means your personal assets are at risk.
Accordingly, as paying the debt can rebound on the director(s) personally, it is essential that before any payments are made under a Director Penalty Notice, the directors determine with a high level of confidence, that the company will remain solvent for the foreseeable future.
