Australian IT contractors affected by the suspension of activities by payroll management service, Plutus Payroll, may have to sit out a legal battle in the Federal Court before being paid.
The outsourced payroll management service, which focuses heavily on the IT sector, suspended operations on 27 April. It is understood that thousands of IT contractors have been left with unpaid wages.
Now, the company has revealed it has launched urgent proceedings in the Federal Court of Australia against the Australian Taxation Office (ATO) – which it claims has frozen its accounts – in a bid to pay the IT contractors on its books.
The company said that the ATO froze its bank accounts on 27 April in a “draconian and unfair manner” without prior warning or consultation.
“Our dispute is with the Australian Taxation Office who believe[s] that Plutus owes the ATO money,” Plutus said in a statement to customers published on 5 May.
The company claims it received no notice of intention to audit, no complaint and no other advance warning of non-compliance from the ATO.
“When the ATO acted, without notice, they froze our bank accounts – and we became unable to pay our contractors the money owed to them,” it told customers.
“We have, for the past five days, made every possible attempt to resolve the commercial dispute in which we are involved and pay all contractors what they are owed,” the company said. “Presently, the amounts which are owed to you, our valued contractors – are still sitting in our Plutus bank account.”
When trouble first struck, Plutus Payroll said it had the option to put the company into administration or receivership. The company claims that it decided, instead, to work towards a resolution that would see the contractors on its books paid.
“Since that time, we have implored the ATO to allow us to release the funds so that we could pay you,” Plutus Payroll said. “We went further and agreed that the ATO could retain all of the other bank account funds – if they would just agree to let us pay you, while the dispute could be considered by the Courts.
“For five days our lawyers have been vigorously protesting on your behalf. Despite our offer – and knowing that we only wanted to release enough of the money to pay your wages - the ATO has this evening refused our request. And exhausted our patience,” it said.
The company said that it instructed its lawyers to urgently file proceedings in the Federal Court, asking the court to intervene and order the ATO to release its bank accounts, letting it pay its contractors.
“Plutus unequivocally denies the ATO’s claim and will vigorously fight the matter through the objection process and the Courts,” Plutus Payroll said.
“Plutus is and always has been rigorously tax compliant. Documents filed with the Court show how Plutus has made payments faithfully and regularly on account of PAYG and these will, in time, be available for public examination.
“We continue to do everything in our power to resolve our dispute and make good on our commitment to pay you the monies you are due,” it said.