Case Study DISPUTE RESOLUTION

Audit resulting in a sham decision

A manufacturer entered into arrangements with labour hire contractors to directly manage production. After an audit of the manufacturer, the ATO asserted that the arrangements with the labour hire contractors were shams. Notices of Assessments/Amended Assessments were issued for failing to withhold tax, overstating GST and the imposition of administrative penalties for false and misleading statements leading to a shortfall of tax remitted.

The issuing of assessments resulted in the manufacturer becoming insolvent. An administrator was appointed.

The administrator instructed Cleary Bentley to review the assessments and if appropriate to lodge an objection against the assessments.

To assist in the process, the administrator entered into a Deed of Company Arrangement (“DOCA”). Cleary Bentley lodged objections against the assessments. The objections were unsuccessful.

With Counsel’s assistance, a Notice of Appeal against appealable objections was lodged with the Federal Court.

The Appeal was successful. The administrator finalised the DOCA and due to Cleary Bentley’s intervention, amended assessments were issued. The manufacturer continues to have a successful business.