Illegal phoenixing is when a business shuts down to avoid paying its debt, then reopens under a new name – operating like nothing ever happened.
You might be wondering how illegal phoenix activity affects your service station – if the issue is related to someone else’s business, it shouldn’t have anything to do with you. Right?
Wrong.
Illegal phoenixing puts lawful service stations at a competitive disadvantage. It creates an uneven playing field and businesses who are doing the right thing get the short end of the stick.
Service station operators often engage builders, electricians and other contractors who could be operating illegally. The other instance we have seen petrol stations being affected by illegal phoenixing is through their own internal fuel accounts where an illegal company has opend a fuel account leaving the service station operator with a bad debt.
The ATO is working to do something about this. They are partnering up with other government agencies in order to detect, deter, and disrupt illegal phoenix businesses – including service stations that fall into this category.
On the Tax inVoice podcast, Assistant Commissioner George Montanez talked about the impact of illegal phoenixing, how it can harm upstanding businesses, and what you can do to avoid being impacted by phoenix operators.
“Illegal phoenix activity can occur in any industry or location. However, it is most prevalent in industries like building and construction, labour hire and cafes and restaurants,” he said. “The best defence against illegal phoenix activity is knowledge and knowing the warning signs. Warning signs may include not receiving pay slips or super payments and being given suspiciously low tenders or quotes for jobs.”
He continued with further red flags to be on the lookout for.
“You should also keep an eye out for suspicious behaviour and make sure you do thorough background checks on who you’re going into business with,” he said.
If you suspect a service station, contractor, fuel account customer or other type of business of illegal phoenix behavior, there are steps that you can take. These steps include:
- Filling out a tip-off form
- Calling 1800 060 062
- Emailing [email protected]
The business industry should be level and fair for everyone. Keep an eye out for illegal phoenixes and do your part in making sure they are stopped in their tracks.