find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Corporate Lawyer (3-5 years PQE)
Category: Corporate and Commercial Law | Location: Sydney CBD, Inner West & Eastern Suburbs Sydney NSW
· National firm acting for domestic and multinational clients
View details
Lawyer – CTP Insurance (2-3 years)
Category: Insurance and Superannuation Law | Location: Sydney CBD, Inner West & Eastern Suburbs Sydney NSW
· Well-regarded team offering mentoring and career development
View details
'Phoenix' lawyers undeterred by ATO crackdown

'Phoenix' lawyers undeterred by ATO crackdown

Helen Anderson, Melbourne Law School

Lawyers who help facilitate illegal phoenix operations have not been scared by ATO raids and are becoming smarter in how they get away with it, according to a law school associate professor.

Phoenix activity describes a director deliberately running their company into the ground to shed debts, then start a new company in the same business debt-free.

Melbourne Law School associate professor Helen Anderson said many lawyers continue to tacitly encourage this type of strategy, despite it leaving creditors and the ATO high and dry.

“Lawyers feel that it is open to them to advise their clients that they can shut down the debt-ridden company and start again via a new company, provided they pay a fair value for the assets.”

She continued: “So the lawyers feel that as long as they give that advice, whether it’s with a nod and a wink, then they're absolutely abiding by the law.”

Ms Anderson explained there’s an assumption from the ATO that a lot of business people are unaware of how 'phoenixing' works so when they go to a lawyer and say, 'I’m in a dreadful financial bind', the lawyer says to them, 'well have I got a plan for you!'

Earlier this year the ATO raided a network of lawyers and tax agents allegedly involved in phoenix activity.

However, Ms Anderson said law firms have continued to offer this advice and become savvier with their approach.

She suggested there are very few prosecutions of lawyers because it is difficult to prove that they have been an accessory to the director’s breach of duty, therefore lawyers are reasonably confident they can continue to get away with it.

Ms Anderson said she hears anecdotes of firms telling people to intentionally phoenix their company, but then advising the owners to divide the work up between multiple advisers. That way, no single source of advice can be identified and no one can be charged as an accessory.

“So long as each of the firms have discharged their responsibilities and said to the director ‘you can’t breach your duties’, then they're off the hook.”

Ms Anderson said that to stop phoenix activity, the government needs to make it harder for people to set up multiple companies.

“We're saying don’t put all your eggs in the enforcement basket, let’s try and disrupt the formation of companies that might be phoenixed in the first place.”

She added: “Let’s reverse the onus of proof on directors if they've been associated with multiple failed companies prove to us why you didn’t break the law rather than us having to prove that they did.”

Like this story? Subscribe to our free newsletter and receive Lawyers Weekly every day straight to your inbox.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

'Phoenix' lawyers undeterred by ATO crackdown
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Aug 23 2017
NT Law Society sounds alarm on mandatory sentencing
The Law Society Northern Territory has issued a warning over mandatory sentencing, saying it hasn’...
Aug 22 2017
Professionals unite in support of marriage equality
The presidents of representative bodies for solicitors, barristers and doctors in NSW have come toge...
Aug 21 2017
Is your firm on the right track for gig economy gains?
Promoted by Crowd & Co. The way we do business, where we work, how we engage with workers, ev...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...