Leniency over

The ATO has done more for struggling small businesses than just about anyone during the last 18 months. The ATO’s relief package, built around tax payment plans and the suspension of interest charges on tax debts, provided a lifeline for many businesses that meant they could sneak through the lean months of 2009.

A few months ago, we told you that the tax man’s generosity was showing some signs of waning. Payment plans that could previously by negotiated over the phone suddenly required plenty of paperwork, and the two-year plans were being replaced by 12 month ones.

It seems the tax man is tightening the screws. In today’s Australian Financial Review, Peter Marsden from insolvency firm RSM Bird Cameron is reporting a “surge” in insolvency appointment and says the ATO is getting much more aggressive about debt recovery.

Cliff Sanderson, head of turnaround consultants Restructuring Works, says he’s seeing a “mild” tightening by the ATO. One little indicator he uses to track the ATO’s mindset is the issuing of director’s penalty notices – he’s seen two in the last month, after not seeing any for most of the year.

“I think they are still relatively softy-softly at the moment,” he told me this morning.

However, if you’re a battling small business hoping for a bit of a leniency from ATO, it’s time to think again – Sanderson says the taxman has no choice but to start getting back to normal practise in the New Year.

“The number of businesses that took up these offers is very large and this can’t go on forever. At some stage the ATO must say, enough is enough. “

You’ve been warned – normal transmission is about to resume.