Gina Jansen represented a Waikato horse trainer in the Hamilton District Court on September 29 for an IRD criminal prosecution tax case which was also reported by the Waikato times.
IRD Tax cases are a very specialist area of our practice for which we have become well known around Hamilton & the Waikato.
But this was not a case of “tax fraud” as reported by the Waikato Times. Charges were laid against our client, pursuant to sections 148 and 143A(1)(d) of the Tax Administration Act 1994, of aiding and abetting a company, of which our client was but one director, in knowingly applying a deduction of tax, namely PAYE, for any purpose other than in payment to the Commissioner of Inland Revenue.
The maximum statutory penalty for a first time offender is a term of imprisonment not exceeding 5 years, a fine not exceeding $50,000 or both. Importantly, from a statutory and legal point of view, this is not tax evasion, nor is it tax avoidance. It is a criminal action, not a civil one and requires the Commissioner to prove intent.
You need a specialist IRD tax lawyer, not an accountant, once you are facing a tax prosecution. Very sadly, we have seen the unfortunate outcome of professional advice to directors to liquidate companies who owed PAYE taxes, thinking it would just be written off.
We have seen the negative outcome of accountants attending Inland Revenue voluntary interviews with client directors where evidence about intent is obtained. Don’t be under any illusions: this is a legal matter and requires a lawyer present, not just an accountant as this is akin to being interviewed by the Police for a serious crime.
We are often left with the remnants of poor advice given to our clients once the issue has become more serious. We want to help our tax clients and get the best result for them.
The IRD Commissioner has become very aggressive in her pursuit of directors who do not apply PAYE once deducted at source. You should always talk to us as specialist tax legal advisers if you have any questions. We know how to guide you through the forest of complicated and very technical tax laws in NZ.
We also have the experience in the courtroom and in dealing with the IRD Commissioner. In this case our client was a first time offender. The result of the judge awarding home detention instead of a jail sentence was good for our client as there was a real chance of the judge sentencing them to jail time.
So call us on 09 869 5820 if you have queries on a similar tax matter. We are happy to take referrals/queries from other lawyers and/or accountants who need guidance as well.