What Directors Should Do When They Receive a Penalty Notice
Becoming a company director is a responsibility that poses a lot of challenges. With additional accountability and responsibility in your name, the role comes with various legal obligations, some of which are not initially obvious until something bad happens, such as receiving a Director Penalty Notice or a DPN. The good news is, understanding Directors Penalty Notice is not a complex process, and as soon as you know the process, it will immediately be out of your hands.
What Is a Director Penalty Notice (DPN)?
A Director Penalty Notice, or DPN, is a legal notice issued by the taxation office to company directors when the organisation has unpaid tax obligations. This makes them personally responsible for the debt when the company has no money left because you, as the director, are required to pay what’s owed until sufficient.
Two Types of Director Penalty Notices
Non-Lockdown DPN. This is a more flexible notice where you can buy time to take action in a certain number of days to avoid personal liability.
Lockdown DPN. On the other hand, it is more serious—because tax obligations have not been reported to the taxation office on time, the only way to resolve it is to pay the debt in full.
What To Do If You Receive a Director Penalty Notice
Verify the details on the notice. Mistakes happen even in these kinds of situations, so before taking any action, double-check if there are any discrepancies on the issued notice.
Don’t panic—but act immediately. As long as you strictly follow the timeframe and do the necessary steps, then you need not worry about having your assets taken from you.
Seek professional advice right away. You might be accountable, but you need not figure it out all on your own, as you have professionals available to help you understand your options and what steps to take.
Consider your payment options. The easiest way out is to pay the outstanding debt as soon as possible; however, if this is not the case, you may be able to arrange a payment plan with the taxation office.
Explore business restructuring or administration. If your company is having financial troubles, a restructuring might be the next sound advice before putting the company into voluntary administration.
Communicate with the ATO. In most cases, the taxation office is always willing to discuss any payment plans and any other possible negotiations as long as your company shows that you are willing to resolve the issue.
Stay informed of the company’s financial obligations.
Being assigned as a company director is such a humbling task, but along with it come heavier responsibilities. It is important that you act quickly, explore available options, and seek professional advice to know what’s best for your situation. A company obligation is not without any consequences. Know that you are not alone in handling the concern; trust the people within the company to help you so you can focus on growing the business and not worrying too much about the current financial situation.
