key takeaways
Since 1 January 2021, the Payment Times Reporting Scheme (PTRS) has demanded qualifying businesses and government enterprises report their payment terms and practices for small business suppliers.
For the last 12 months, these businesses enjoyed a penalty-free transition period granted to assist them with understanding the requirements and establishing satisfactory procedures and processes to complete reporting the required matter, etc.
But now, time's up – that transition period is over, and businesses are staring down the barrel of major penalties for non-compliance.
With the reporting period deadline quickly approaching, it's crucial that businesses perform thorough final checks on the integrity of their reports to avoid the potential penalties that come with non-compliance.
The next Payment Times Report is due on 30 September 2022, and though this is the third reporting period since its establishment, it's the first reporting period where businesses have the potential to be penalised.
As it's the first time businesses have been exposed to these particular penalties, it's important to know the risks and how your business could be affected by non-compliance.
What are the penalties for non-compliance? What's there to be concerned about?
The potential penalties for non-compliance with the PTRS requirements are significant.
Keeping in mind a penalty unit equals $222, the maximum civil penalties for incorporated entities are:
For the purpose of these examples, we will be using a business with the minimum turnover required to qualify for the PTRS ($100mil). – we'll call this business 'Ace Technology'.
Type of Non-Compliance | Maximum Penalty | Example |
|---|---|---|
Failure to Report | 300 penalty units. | Ace Technology is a qualifying business with a $100mil turnover. |
False or Misleading Reports | 0.6 per cent of total income for the year contravention occurred. | Ace Technology didn't submit an accurate report and could be penalised up to $600,000. |
Failure to Keep Records | 0.2 per cent of total income for the year contravention occurred. | Ace Technology failed to keep the necessary records and could be penalised up to $200,000. |
Failure to Comply with Audit Notice | 200 penalty units (can be applied per day of non-compliance). | Should Ace Technology receive an audit notice and not company with it, it may be penalised up to 200 penalty units ($44,400). |
Failure to Reasonably Assist Auditor | 0.2 per cent of total income for the year contravention occurred. | Should Ace Technology not assist the auditor in a reasonable manner, it could be penalised up to $200,000. |
Not only does your business run the risk of facing one of these major penalties, but its identity and details of non-compliance are likely to be published on the Payment Times Report Register as well. While that mightn't sound ideal, there is a way to argue the publication if you have a valid reason – we touch on that a bit later.
In addition to this, lodging a late report could also affect your business's regulatory and lodgement compliance history.
So, you know the penalties – now you need to know how your business can avoid them.
How can I protect my business from non-compliance?
There are only three ways to protect your business from non-compliance this reporting period:
- Ensuring the report is fully completed;
- Ensuring the report is lodged on time; and
- Ensuring the reported information is accurate.
In order to achieve 1, 2 and 3, you will need to ensure your business's current operational data and system capabilities are designed to achieve compliance with the requirements of the PTRS provisions.
It sounds simple, but one small misstep might be the difference between compliance and a noticeable impact on your business's profitability.
With only one week to go, it's safe to assume your business's report for the 1 January 2022 to 30 June 2022 period (if this is relevant to your reporting year) is in its final stages. The information's collated, the I's are dotted, the t's are crossed, and it's nearly time to submit.
Our advice? Don't stumble at the final step
Don't forget: the best defence is a good offence – don't wait for the Payment Times Reporting Regulator to come after your business. Get ahead of the game and be certain the report is complete and submitted.
Our Commercial and Taxation lawyers are experts at reviewing PTRS draft lodgements & data integrity and providing recommendations for managing any complexities, limitations or missing inputs you might have.
They can help guarantee your report is complete, accurate, and submitted on time.
get in touch with us!
If you'd like any help with lodging your business's report or have any questions, please fill out the enquiry form below for an obligation-free appointment.
The deadline's passed, and my business might be non-compliant – what happens now?
If a Payment Times Reporting Regulator marks your business as non-compliant, penalties may apply. If such penalties are applied, these will need to be paid by the due date unless a case is made for a full or partial remission (at the Regulator's discretion).
From a reputational risk perspective, one thing that can be done, though, is asking for a review of the decision to publish your business's identity or details of non-compliance. So long as there's a written application submitted within 14 days of the decision via the Payment Times Reporting Portal outlining the reasons for the reconsideration, the release of these details can be stopped.
Notice of this decision with the effective date and reasonings for the decision will come in writing also.
If this is the case, it's important to nail the review application. Our Commercial and Taxation lawyers don't just stop at helping you potentially avoid penalties – they can also assist with drafting such submissions and applications.
If your business's report still hasn't been lodged, we recommend preparing it now and seeking legal assistance where needed to reduce the non-compliance implications to the best extent possible.
conclusion
Though the transition period's over, your business doesn't need to navigate this on its own.
As 30 September looms closer, you want to be, without a doubt, concrete-sure there won't be any nasty non-compliance surprises. You know what the penalties are and what's at stake, and you also know what to do to manage the reputational risk of your business when submitting the Payment Times Report.
Our Commercial and Taxation teams are here to help with a last-minute look over your business's report and capabilities to make sure the threat of penalties remains just that – a threat.
how can we help?
For this upcoming Payment Times Report, McInnes Wilson Lawyers can help by assessing your business's capabilities compliance with the PTRS by providing recommendations for managing complexities, limitations or missing input. We can also help assess lodgements and the integrity of your business's reported data.
If you'd like to get a head start on the next report, we can provide:
- Technical/legal advice on how the PTRS provisions impact you (e.g. do you qualify as a reporting entity?) and whether there's a requirement to report;
- Complex organisational structure advice about which entities may be required to report under the rules; and
- Practical advice around what information and parameters are required to be reported.
The team can also assist in preparing a review application for having your business's details published or not published (depending on the circumstances) in the Payment Times Report Register.
For those of you who have already submitted the report on behalf of your business but would also like a last-minute review, we can assist you with this and any required revisions.
If you'd like any help with lodging your business's report or have any questions, please fill out the enquiry form below for an obligation-free appointment.
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