Erring contractor goes in for 19 months

A labour contractor may have realised that one of the dumbest things to do was to evade tax.

Abdul Zaheed of Bay of Plenty began his prison term of 19 months on August 30 after the Tauranga District Court found him guilty of evading more than $166,000 tax liability. He admitted the breach.

He faced 15 charges and in addition to the term in prison, he was obliged to pay $20,000 in reparation.

Inland Revenue Assurance Manager (Investigations), Jonathan Matthews described the actions of the defendant ‘deliberate and calculated.’

“He set up a company and then failed to meet the tax obligations. He was not only cheating taxpayers but was also getting an unfair advantage over other businesses in the industry that played by the rules,” he said.

Mr Matthews said non-payment of PAYE meant that Zaheed’s workers could possibly get additional benefits to which they were not entitled.

The Court heard that the defendant was supplying labour for orchardists and packhouses since 2001. He established a new labour contracting business called, ‘Multani Horticulture Limited’ in September 2008.

“The company registered for GST and income tax at the same time, and was required to file GST returns every two months and PAYE returns monthly and to pay the assessed tax. However, by May 2009, it had failed to file any GST returns and had only made two PAYE payments totalling $3305,” Mr Matthews said.

Inland Revenue officials obtained copies of the company’s bank statements, which indicated that it earned contracting income for GST purposes of at least $1,212,328 between October 2008 and end of March 2009.

Zaheed subsequently agreed to file GST returns, which showed unpaid tax of $134,547. Monthly returns filed showed PAYE outstanding of $199,000.

The Court heard that GST and PAYE returns were not filed from April 2009 to the end of July 2009.

“During that time, the Company earned an additional sum of $245,000, resulting in tax liability of $74,000. The Department received just over $200,000 of withholding tax credits and about $40,000 from deduction orders placed on company bank accounts, which was credited off the debt,” Mr Matthews said.

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