The prospect of QBCC licence suspension can cause significant stress and uncertainty. As a builder or tradie operating in Queensland, your QBCC licence is your licence to build, your credibility in the industry, and the cornerstone of your business.
While there are many reasons your licence may be suspended, in this article we will focus on suspension due to failure to adhere to QBCC’s minimum financial requirements (MFR). We aim to provide some basic information about QBCC licence suspension, however for specific advice for your circumstances please contact our team as soon as you receive a notice of licence suspension from QBCC or if you are worried about issues that may lead to suspension.
Navigating QBCC’s Financial Requirements to Avoid Licence Suspension
QBCC imposes strict financial regulations on builders to ensure financial stability and compliance. Non-compliance with QBCC reporting requirements can lead to both the suspension of your QBCC licence and ultimately licence cancellation.
The financial information submitted to QBCC must adhere to the Minimum Financial Requirements (MFR) guidelines. It’s essential to ensure that your net tangible assets (NTA) are adequate to support your projected revenue for the upcoming year, and that the calculations do not rely on assets specifically excluded by QBCC guidelines. Read more about the specifics of QBCC MFR here.
If you have any concerns at all about whether you are meeting QBCC’s financial requirements, you should seek guidance from your advisor to explore available options and provide QBCC with additional information to maintain your licence.
How Does the QBCC Licence Suspension Process Work
Failing to meet the QBCC’s Minimum Financial Requirements can initiate a process that every licensee should understand. Let’s walk through what you might expect and highlight that while this isn’t a linear progression, certain steps may be escalated depending on the circumstances.
- Notices Sent by QBCC: Initially, you’ll receive notices from the QBCC, informing you of the MFR compliance breach. This is your cue to call in expert advice to ensure you navigate the following steps correctly.
- Request for Management Accounts: Before a full audit, QBCC may ask you to provide management accounts. This is an interim step allowing for a preliminary review of your financial health. Submitting up-to-date management accounts can sometimes pre-empt the need for a more invasive audit if they satisfy the QBCC’s concerns.
- MFR Audit: An MFR audit is a more detailed investigation designed to thoroughly review and verify the licensee’s financial status against the MFR requirements. This occurs when a licensee cannot demonstrate they comply with QBCC MFR. As part of this Audit the licensee is required to produce an MFR Report that demonstrates they are complying with MFR – this can only be carried out by a qualified Accountant.
- Notice of Intention to Suspend: A Notice of Intention to Suspend may then be issued. This is a serious warning allowing you a final opportunity to take corrective action. You will have 21 days to respond.
- Suspension: Failure to act on the notice or satisfy the QBCC that you meet MFR can lead to suspension, which temporarily revokes your ability to carry out licensable activities. In other words, you must immediately stop all work.
- Notice of Intent to Cancel: At the same time a Notice of Suspension is issued, the QBCC will also issue a Notice of Intent to Cancel your license within 21 days unless you can give them reasons why that should not occur. This is your final opportunity to demonstrate that you meet MFR.
- Cancellation: The last resort is license cancellation, at which point your license is officially terminated.
If your business is insolvent you will be personally excluded from holding a licence for 3 years – you then have to reapply. If you are excluded twice you are excluded FOR LIFE!
Remember, early and proactive engagement with the QBCC can prevent escalation at any of these stages – particularly responding within given time frames ordinarily 21 days. It’s crucial to address any financial issues promptly to avoid severe consequences. If at any stage a licensee objects to QBCC action, they can request an internal review within QBCC and/or take the matter to QCAT for an independent review.
Seeking professional advice as soon as you receive notice of the proposed suspension can ensure your first response gives you the best chance of reversing the suspension.
Avoiding potential QBCC licence suspension
Staying compliant with QBCC regulations is crucial in order to avoid potential QBCC licence suspension and ensure the sustainability of your business.
Here are some essential tips for remaining compliant:
- Manage your workload: Taking on too much work can increase the complexity of your accounting and potentially lead to exceeding your Maximum Allowable Turnover (MAT).
- Correct quoting and pricing: Properly pricing your work is vital for maintaining profitability and ensuring you have the Net Tangible Assets (NTA) to support your MAT.
- Get Your Books in Order: Maintaining accurate and up-to-date financial records is essential for understanding your business’s financial health and meeting your obligations. Without clean books, you’ll lack visibility into your business’s performance and may struggle to comply with QBCC regulations.
- Regularly Check Your MAT & NTA Position: Stay proactive by regularly monitoring your MAT and NTA position. Being aware of your financial metrics allows you to address any potential issues early and take corrective actions to remain compliant – e.g. if you think you are going to exceed your Maximum Revenue, take measures to upgrade your licence.
- Work with the experts and check before you lodge: Collaborate with qualified accountants or financial advisors who understand QBCC regulations and can provide guidance on compliance. Before lodging any reports or documents with QBCC, ensure they have been thoroughly reviewed to avoid compromising your position further.
- Maintain Cash Flow Forecasts: Keep records current and manage cash flow with three-month rolling forecasts to anticipate funding gaps early and prevent potential issues.
- Verify your QBCC Licence Class and Turnover Limit: Ensure your QBCC licence class aligns with your business activities and stays within the allowable turnover limit to maintain entitlements and access to dispute resolution mechanisms.
- Document Variations and EOTs: Confirm variations and extension of time (EOT) factors via email at the relevant times to protect profit margins and avoid liquidated damages claims.
We are your trusted partner in this journey, always ready to support and provide guidance to help safeguard your QBCC licence.
We offer a free QBCC MFR Consultation with one of our qualified QBCC accountants and encourage you to book in to discuss any concerns you may have about your QBCC licence.
If you’re facing challenges or are worried about potential QBCC licence suspension issues, we can assess your compliance with QBCC financial standards and devise a strategy in case of discrepancies.
Reach out to us to schedule a consultation with one of our QBCC specialists.
