By Frank Newman on 17th October 2015
On 17 September Stuff reported on the conviction of Christchurch property developer, David Henderson, on seven charges of tax fraud. The case is a useful reminder for business owners. Here are some of the key points from the article:
- The charges were for “aiding and abetting his company Dweller Ltd to apply tax deductions or deemed tax deductions for purposes other than payment to the Commissioner of Inland Revenue.”
- The offending carries a maximum penalty of five years jail and/or a $50,000 fine.
- The judge said there was “satisfied Henderson was fully engaged in the payment of wages and salaries and the PAYE, and that it was his decision on each occasion that PAYE would not be paid…Henderson decided that Dweller should pay general creditors ahead of the IRD. In addition, he had decided each month after June 2010 that the current salaries and wages be paid rather than the outstanding PAYE.”
- Henderson is appealing the decision.
The message is pretty clear: Business owners who pay general creditors ahead of the IRD are putting themselves at risk.
This is one reason why we suggest business owners have a managed payroll system where the gross amount is deducted from the outset.