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ATO Troubles

September 14, 2017

It has been a week of helping clients deal with stressful situations.

One client had a meeting with the ATO last week regarding an R&D rebate claim in relation to the development of some software with a large artificial intelligence component, and went away with the understanding that:

(a) The ATO believed he had committed technical fraud;
(b) He needed to make some sort of disclosure;
(c) That disclosure would result in an audit; and
(d) The audit would delay his claim for another two years, having already been waiting two and a half years for the R&D rebate.

We met with him on Monday and started drafting two e-mails: one about the fraud and the disclosure and other explaining, as best our client could, the discrepancies in relation to a some invoices, a few of which had used a business name that was not registered at the time, the ACN of a company that had been deregistered the year before, and an ABN that was only obtained a few months after the date of the invoice.

We sent the first one off this morning, and were surprised to get a reply within a few hours advising that no one was being accused of fraud, at least not at the moment, but the matter was certainly being investigated, for obvious reasons, and confirming that our client did not need to make disclosure.
Our second e-mail was about four pages long and went into some detail about the project and the explanation that had been given to our client about the anomalies and other invoices totalling $400,000 paid for research, knowledge and know-how that another totally unrelated company had compiled over the course of a few years.

The client and his staff checked the e-mail before it went, and told us it would have taken him a month to write it if he had to do it himself. That e-mail only went out last night, so no response yet!

We were in a hurry because the client is off overseas tomorrow for some alternative treatment following successful surgery to remove a cancerous lung tumour. He tried the treatment before the op and the surgeons were surprised to find the tumour was cancerous but that it was 99% dead, but that is another story.

For help with stressful legal situations, call Michael Paterson & Associates.

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