Taxation Law - Taxation Disputes - Concealment

There are a wide range of taxation disputes which occur. Some of these are full-blown matters which start off as an enquiry whilst others run the full gamut and end up in court. Matters often escalate because of the approach taken by taxpayers and their advisers at an early stage. Taxpayers may feel confronted and try to characterise or manufacture a situation which will support circumstances which will disguise their tax non-compliance were this not done. They conspire to contrive a situation where their affairs including their financial accounts will pass muster on cursory examination. Often these arrangements are hastily put together with little forethought as to the inevitable outcome should they be discovered by the Tax Office to be fictitious causing them to switch to fulltime audit with disastrous consequences.

Where material is presented and the ATO calls for information which on examination is equivocal, contradictory or inconsistent, detailed enquiries will follow. Interestingly, all sorts of problems can arise which often involve the directors of a company and/or their accountants. It should not be forgotten that where tax non-compliance is detected, not only the company but also its directors may bear personal liability. Contrivance includes destroying documents, backdating documents, purported sales, dealing and transfers of assets or businesses, hastily drawn loan agreements and a whole range of other matters may be involved. The problem is where this is done and the Tax Office calls for source documentation these contrivances or arrangements will be uncovered. Where this happens only the worst possible results will occur.

Taxpayers who fall into this category not only have problems associated with tax shortfalls and conspiring with their tax advisers but this would appear to amount to a scheme to defraud the revenue. Simply put, they may have entered into a scheme to try and avoid tax and then when they think will be discovered they enter into a further scheme to try to defeat detection. Unfortunately this amounts to a fraud on a fraud and where detected the ATO understandably reacts harshly. After all they are there to protect the revenue and to secure payments from taxpayers where the full amount of tax has either been undeclared or omitted. Don’t try to rewrite history. Secure proper independent legal advice.

Obviously where tax is not paid the Tax Office will require substantiation. They will ask for all source documents including deposit and cheque books, profit & loss and balance sheets, all sales information, all BAS returns, all contracts or agreements, full payroll information, all worksheets, all bank statements and all tax invoices amongst others. How could anyone believe that once this information is called for that any tax not paid or fraud practiced on the authorities will not be discovered! Where a taxpayer has sought to conspire with others to enter into a scheme or arrangement in order to defeat the revenue it follows that only the harshest consequences will result. To put it simply; a person who has structured or restructured their affairs without merit such that they are in violation of various tax laws applying in these circumstances, is in real trouble. Essentially they are involved in either full-blown tax fraud or tax evasion and anybody assisting them is at real risk of prosecution and gaol. 

For competent, professional advice and assistance contact Frank Egan of LAC Lawyers on (02) 9904 6800.