Tax debts have been steadily accruing for many businesses as a result of the COVID-19 pandemic.
Recently, liquidators we have dealings with, are reporting an increase in enquiries relating to new collection activity from the ATO as it seeks to address the $1.3 billion shortfall against its compliance revenue target.
When COVID-19 hit, recovery action by the ATO was suspended. Additionally, businesses indebtedness to the ATO increased as a result of ongoing accruals and new payment arrangements.
At the same time, debt collection by businesses generally was stifled as a result of a moratorium on liquidations and bankruptcies and increases in thresholds for commencing winding up and bankruptcy proceedings. As a result of this, and a general perception of insolvency or potential insolvency of small businesses in 2020, many businesses put all debt recovery action on hold pending the outcome of the COVID-19 pandemic.