Do not Panic
Although receiving a director penalty notice might trigger panic as your initial response, understanding the most effective course of action how to deal Director Penalty Notice is crucial.
Being knowledgeable about the implications of Director Penalty Notices is of utmost importance when determining your approach. Director Penalty Notices can hold directors personally accountable for outstanding debts, taxes, and superannuation.
How to deal Director Penalty Notice
Let’s delve into the specifics by examining two types: lockdown DPNs and 21-day deadline DPNs. The former is issued by the ATO when specific returns aren’t lodged within the due date, while the latter is issued when liabilities remain overdue for an extended period. If directors fail to take action within 21 days, they become personally liable for the relevant debts. Here are the options directors can consider in this scenario:
- Pay the debt in full.
- Initiate the company’s liquidation.
- Opt for voluntary administration of the company.
- Appoint a small-business restructuring practitioner.
When determining how to address a Director Penalty Notice within the 21-day timeframe, the company’s viability plays a significant role in the decision-making process. Conducting a viability assessment as early as possible ensures a comprehensive evaluation. Neglecting the notice doesn’t exempt you from personal liability, making it advisable to reconsider ignoring the letter.