With illegal phoenix activity in the government’s crosshairs following a PWC report that estimated the impact of such activity to be around $5 billion, practitioners have been urged to tread carefully when advising business clients.
Speaking to Accountants Daily, Pitcher Partners business recovery and insolvency services consultant David Vasudevan said accountants may unwittingly be enabling illegal phoenix transactions if they are not vigilant.
“From an accountant’s perspective, you do establish a very close relationship with your client and there is a genuine desire to help others and effectively takes things at face value when a client says something and there are instances where accountants have actually done the wrong thing just for that very reason,” said Mr Vasudevan.
“They may also have taken a position which may not be correct because of some undue pressure from a client.”
Instead, Mr Vasudevan believes there needs to be a shift in thinking among professionals to help curb such activity.
“Any professional who might have seen or been approached to facilitate phoenixing needs to understand the risk for engaging in phoenixing outweighs any possible commercial benefit,” said Mr Vasudevan.
“Sometimes accountants feel pressured to say yes or try to help the particular client out, thinking that nothing untoward may happen and it’s that mindset that needs to be changed.
“If clients ask an accountant to do a certain task, there’s no harm in asking why and test that to see if the reasons behind that particular task are appropriate or not. Ultimately, it is ok to say no.”