The Australian Tax Office, along with federal and NSW police, have raided a dozen locations across Sydney to crack down on illegal phoenix businesses.
ATO deputy commissioner Michael Cranston said that more than 100 officers were involved in the operation. It is unknown what types of businesses or industries were targeted.
"Phoenix operators create an unfair market advantage for themselves by deliberately liquidating companies to avoid paying creditors and employees and then setting up new entities to carry on the same business," he said. "This allows them to undercut their competitors."
The raids not only focused on fraudulent business operators, but also tax agents, lawyers and liquidators who may have colluded to allow such activity.
"We are particularly concerned where third parties that are meant to be independent and transparent may be aiding dodgy business operators," said Cranston.
The deputy commissioner said that not giving notice of the visits was crucial, to avoid wilful destruction of evidence.
"Sometimes the element of surprise is needed to get a result, particularly when dealing with companies we suspect are setting out to cheat the system and where records may be destroyed if we give notice."
The ATO announced that phoenix activities cost the national economy up to $3.2 billion annually, with honest businesses losing a staggering $2 billion through debts that go unpaid or unfulfilled orders.
"We believe more than $40 million in tax revenue is at risk in this Sydney network alone," Cranston said.
The raids last week were a continuation of the work by an anti-phoenix joint taskforce formed earlier this year. The Phoenix Taskforce allows the ATO, ASIC and law enforcement organisations to collaborate on prosecuting fraudsters by sharing intelligence and data.
The tax office called for the public to report any phoenix-like behaviour by phone on 1800 060 062, or online at ato.gov.au/reportaconcern.
CRN has previously reported on the collapses and rebirths of IT businesses that raised suspicions of phoenix-like behaviour.
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