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The Federal Court has disqualified a Sydney-registered liquidator from practising for a decade after finding that he was “systemically negligent” and reckless.
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Federal Court disqualifies liquidator in ATO landmark case
08 November 2019
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The sole director of Veritas Advisory Pty Limited, David Iannuzzi, has now been stripped of his liquidator registration and barred from practising as a registered liquidator for 10 years.
The court order comes after the ATO initiated Federal Court proceedings using Corporations Act provisions for the first time to take on facilitators of schemes designed to avoid paying tax.
Between approximately mid-2014 and September 2017, Mr Iannuzzi was appointed as a liquidator of seven groups of companies, comprising 23 separate companies.
The Federal Court found that Mr Iannuzzi repeatedly fell short of the standards that would ordinarily be expected of him as a competent registered liquidator, making “little or no effort other than to go through a set of standard procedures” in his work.
“On many occasions, he failed to make even the most basic enquiries about a company’s assets such as previous bank accounts or real property, or who its real directors were. His supervision of his staff on whom he relied to do much of the work was patently inadequate,” said Honourable Justice Stewart.
“Mr Iannuzzi’s systemic conduct was certainly reckless; it fell very far short of the conduct that was to be expected of him; it demonstrates that he failed to observe the obligations of candour on him with regard to disclosing relevant circumstances to creditors; it reflects poorly on his character; and it demonstrates that he is not a fit and proper person to remain registered as a liquidator.”
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ATO assistant commissioner Aislinn Walwyn said today’s outcome demonstrates that the ATO will take firm action to hold facilitators of illegal phoenix activity to account and take steps to remove them from the business environment where they have acted negligently.
“Our taxation and superannuation systems rely on the integrity of industry professionals, including insolvency practitioners,” Ms Walwyn said.
“Illegal phoenix activity affects the whole community. It rips off creditors and employees and reduces the amount of revenue that could be collected to fund essential community services.”
A PwC report had previously estimated the annual direct impact of illegal phoenix activity on business, employees and government to be between $2.85 billion and $5.13 billion per annum.
This includes small businesses and individual contractors or suppliers who are left unpaid, employees who haven’t been paid their entitlements, and all Australian taxpayers who ultimately bear the burden of unrecovered tax debts left behind by phoenix activity.
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