Vic authority cracking down on phoenix builders

Victorian building companies who deliberately and repeatedly go bust to avoid paying debts have been put on notice, with the state’s Building Authority (VBA) working as part of the Phoenix Taskforce to crack down on phoenixing.

And 15 building or related companies have been refused registration since the VBA toughened is stance in 2020.

The VBA announcement is clearly an effort to shore up flagging confidence in the state’s building regulation and complaints system after recent work to remove and replace combustible cladding revealed that some blocks had serious hidden defects.

Now, the VBA says that with the assistance of the Australian Taxation Office’s Phoenix Taskforce, it is cracking down on builders who walk away from defects rather than fixing them.

Instead, they go into voluntary liquidation or receivership, leaving the owners to pay for remediation, while the directors of the building firm start up again under a different company registration.
The VBA’s Executive Director Regulatory Operations David Brockman said in a press release last weekend that people with ties to a company that has entered external administration have faced greater scrutiny since the VBA had its powers strengthened in 2020.
“We have a role in ensuring practitioners understand how to do things correctly, and in discouraging risky, harmful behaviour in the building industry such as illegal phoenixing,” Mr Brockman said.
“If you think you can avoid the scrutiny of regulators by simply liquidating your company, moving assets and then seeking re-registration, think again.”

Established in 2014, the ATO Phoenix Taskforce brings together federal, state and territory agencies to detect and disrupt businesses engaging in illegal phoenix activity.
The VBA runs a series of credit history and background checks using internal and external data when
practitioners who have entered into external administration apply for registration or renewal.
The extra scrutiny means the corporate activity of building practitioners who have served as directors, secretaries or influential persons of companies that have entered external administration can impact on that practitioner’s suitability for registration or renewal.
If the VBA confirms that a building practitioner served in any of these capacities in the two years prior to their company entering external administration, the VBA can refuse their registration or renewal, or issue a show cause notice requiring them to justify why they should be granted further registration.
The VBA has denied 15 registrations or registration renewals since July 2020 as part of its work preventing illegal phoenixing activity.

Among those stopped were domestic builders, commercial builders, commercial building companies, domestic building companies and draftspersons.
ATO Assistant Commissioner George Montanez said the ATO shares information with taskforce members such as the VBA, using sophisticated data matching tools to identify those promoting or engaging in illegal phoenix activity.
“As a taskforce we take action against phoenix operators by working together to disrupt their business model,” Mr Montanez said.
“We make it financially unviable, removing their ability to operate, applying financial penalties and prosecuting the worst offenders.”
Victorians can visit vba.vic.gov.au/check to make sure their builder or plumber is registered or licensed.
The VBA says if they know of or suspect illegal phoenix activity, they should report it to the ATO by completing a Tip-Off form or calling the Tax Integrity Centre on 1800 060 062.