When to Refer Your Client to a Tax Debt Specialist

Part of the Tax Assure Advisor Insights series, where our team sits down with specialists from across the wider business advisory space to talk through what’s actually happening for directors and the businesses we work with.

If you advise small and medium businesses, as an accountant, broker, business consultant, lawyer, or fractional CFO, you have probably hit the moment. A client has ATO debt. You’ve done what you can with the ATO directly. You’ve negotiated a plan. It isn’t quite landing the way you hoped. The client is still under pressure and you’re not sure what the next move is.

This piece is about that moment, and how to know when the right next move is a specialist referral rather than another round of generalist effort.

Our CEO Olga Koskie is joined by Paul Farmer of Mentoris Group, a business advisory firm that works in parallel with accountants and other specialists across the SME advisory space. Olga and Paul talk through how the parallel model works, what tax debt negotiation actually involves at the specialist level, and the situations where referring in early gets a better outcome for everyone. The full discussion is available to watch below, along with the rest of the series on the Tax Assure YouTube channel.

Key takeaways

• ATO debt negotiation is a specialism. A generalist accountant or broker can usually secure a payment plan, but specialist outcomes look materially different.
• The parallel-specialist model — accountant, business consultant, tax debt negotiator, broker, insolvency practitioner all in their own lanes — produces better client outcomes than any one advisor trying to cover all bases.
• The signs a client should be referred in early include defaulted payment plans, payment plans that don’t match cash flow, post-SBR residual debt, and any recovery action.
• The ATO’s collections posture has shifted. Tactics that used to work for clients, including rolling defaulted BAS debt and COVID-affected framing, are no longer reliable.
• Referring early is not a loss of client relationship. The specialist gets in, fixes the specific problem, and leaves. The primary advisor relationship continues.
• Tax Assure works in parallel with accountants, brokers, business consultants, lawyers, and insolvency practitioners. The client stays your client.
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What ATO debt negotiation actually involves at the specialist level

The ATO will offer a payment plan to most directors who ring up. That is not the same thing as ATO debt negotiation as a specialism.

At Tax Assure, fourteen staff do nothing but talk to the ATO about debt, payment arrangements, and interest remission. Every day, all day. No lodgements, no returns, no BAS work, no tax advice. The depth of practical experience that produces, what the ATO will actually agree to, what evidence works, how to position different categories of debt, which case officers respond to which arguments, isn’t something a generalist can replicate while also doing everything else.

“It’s impossible to compare that with another expert or another service provider that has so many other tools and so many other skills in their belt.” — Olga Koskie

Paul’s framing of this is honest about the accountant’s position.

“How many accountants value themselves enough to be able to have a conversation with the ATO about getting a specific payment plan or getting interest refunded? They’ll ring and they’ll go, oh, we can get you 15 grand a month for 12 months. That’s only what they felt comfortable negotiating.” — Paul Farmer

The difference at a specialist level shows up in three places: the affordability of the plan, the amount of interest and penalty remitted, and the protection of the client from recovery action while the plan is in place.

The parallel-specialist model

The model Olga and Paul describe is one of advisors operating in their own lanes, side by side, with the client at the centre.

The accountant runs lodgements, compliance, and tax. The business consultant, Mentoris Group’s role, in Paul’s case, helps the director reset strategy and rebuild a healthy view of the business. The tax debt specialist handles the ATO. A broker handles finance if needed. An insolvency practitioner is in there if the company isn’t viable.

“We all work side by side in our columns together. The client is the lake, the pool, where we need them to be, that we’re all contributing to get them the absolute best outcome.” — Olga Koskie

Paul’s frame on this is worth holding onto. The role of any one specialist is to get in, do the work, and get out. None of the specialists wedge themselves in the business. There’s no 12-month contract from Tax Assure. There shouldn’t be one from a business consultant either, in Paul’s view. The job is the job.

“It’s not about wedging yourselves in the business. Get in, fix it, and get out.” — Paul Farmer

For advisors thinking about referrals, this matters. Referring a client to Tax Assure does not mean losing that client. The specialist solves the specific ATO problem and the primary advisor relationship continues.

When to refer in

There are five situations where referring a client to a tax debt specialist gets a materially better outcome than continuing on the current path.

1. The current payment plan isn’t being met. Once a plan defaults, the ATO’s posture shifts. Renegotiation is harder and the available options narrow. A specialist intervening before the second default usually saves the plan.
2. The payment plan doesn’t match the client’s cash flow. A plan that looked workable on paper but doesn’t match the actual seasonality or rhythm of the business. The longer this runs without renegotiation, the more interest accrues.
3. The client has come out of a Small Business Restructure with residual debt. The post-SBR plan is the most underestimated problem in this space. Many SBRs leave behind residual debt on a plan that isn’t sustainable. Tax Assure now regularly picks up these cases.
4. The ATO has commenced recovery action. Director Penalty Notices, credit reporting, garnishee notices, or winding-up proceedings. Each of these is a specialist’s job. Each of them needs a fast, evidence-based response that a generalist usually can’t put together at speed.
5. The interest and penalty load is disproportionate. Where most of the debt is interest and penalties rather than primary tax, there are remission paths a specialist can pursue that an accountant generally won’t.
   
   

If any of these match a client situation, referring earlier rather than later improves the outcome.

What’s actually changed in how the ATO collects

If you’ve been advising clients on ATO debt for a few years, the playbook has changed. Three shifts that matter for advisors specifically:

General Interest Charge is no longer tax-deductible. Recent legislation removed the deductibility of GIC. The signal from the ATO is that they’re no longer prepared to function as a cheap small-business bank.

Being COVID-affected is no longer sufficient on its own. The ATO now wants compliance, lodgements up to date, payment plan being met, plus specific circumstances outside the director’s control that match the periods when the debt accrued. COVID alone, for most current applications, no longer cuts it.

Rolling defaulted BAS debt into fresh plans no longer works. The pattern of defaulting a plan when the next BAS falls due, then rolling everything into a new plan, is no longer accepted. Default now and the client is in different territory.

For advisors with long-standing clients, this is the kind of shift that’s easy to miss because it happened gradually. The client’s strategy worked for years. It doesn’t anymore.

Watch the full discussion

Olga and Paul talk through the parallel-specialist model and the state of ATO debt advisory in more detail in the conversation below.