Mitigating risk if purchasing an ABN

Discussion in 'Legal Issues' started by Eyespy, 20th May, 2020.

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  1. Eyespy

    Eyespy Member

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    I'm looking at purchasing the client books of a business that is an approved supplier for the ndis. My accountant noted that approved status is attached to the company, not the client book and has recommended that I not take on the Abn. I spoke with the ndis and they have confirmed that to maintain the approved status I would need to take over the ABN, otherwise a new application needs to commence from scratch. They also advised current NDIS clients didn't have to remain with the business once it changed ownership and that clients should agree in writing to the change in service provider.

    The business otherwise appears sound.

    Are there any strategies to mitigate the risk involved in this through sale contract conditions or is this in the "too risky" basket and I look for something else?

    Thanks
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    An ABN is just a number not an entity. I don't know what a NDIS is but liability doesn't depend on a number.

    What does your lawyer say?
     
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  3. Eyespy

    Eyespy Member

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    Terry, you're my lawyer!!!

    I'll send you an email!
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    He asks rhetorical questions. :rolleyes:
     
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  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You cannot buy and transfer a ABN. It is applicable to the entity. It would be unwise to buy a company rather than buying the business the company operates. You could acquire unknown liabilities and debts and guarantees etc. Or a pending (unknown) employment or legal problem.
     
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