FALSE RETURNS OF INCOME

Press, Volume LXXXVIII, Issue 26797, 31 July 1952, Page 3

FALSE RETURNS OF INCOME

BAKERY FIRM FINED £7OO

DEFICIENCY OF £12,000 IN EIGHT YEARS

“This is a serious fraud by a big and prosperous company and they are without excuse. Making false returns of income is sometimes called income-tax evasion and is often spoken about lightly. They are frauds and really amount to theft by a dishonest citizen at the expense of the whole community,” said Sir Arthur Donnelly, the Crown Prosecutor, who appeared for the Commissioner of Taxes, when the firm of L. A. Woodward, Ltd., bakers, of Christchurch, faced eight charges of wilfully making false returns of income for the years 1943 to 1950 inclusive, in the Magistrate’s Court before Mr E. A. Lee, S.M., yesterday. Mi T. A. Gresson appeared for the defendant company, which pleaded guilty to all charges. The maximum penalty of £lOO was imposed on the first six charges and £5O on each of the other two. During the years 1943 to 1950, Woodward, who was a one-man company and the only shareholder, made returns of income amounting to £33 860, whereas it had been discovered that the correct income was £46,714. The total amount of tax unpaid was £9203, said Sir Arthur Donnelly.

He listed the amount of income returned by the company and the actual income discovered by the tax investigators as follows (actual income in parenthesis): 1943, £4364 (£6476); 1944, £4789 (£6536); 1945, £4652 (£6602); 1946, £5344 (£6327); 1947, £3757 (£6114); 1948. £3828 (£6206); 1949. £3353 (£3995); 1950, £3725 (£4455). It was quite possible that not all the deficiencies had been found, said Sir Arthur Donnelly. Woodward had charged personal living and travelling expenses to the business and there had also been the deliberate suppression of sales amounting to £lO,OOO. He had also charged to the firm the wages of a gardener, and a charwoman and expenses in running his car. "He had no justification in making these deductions.” said Sir Arthur Donnelly. Reports to Inspectors

Woodward had made verbal reports to the inspectors when they saw him but he regretted that these were not wholly truthful or satisfactory. He did not hinder the inspector, but let him find all the discrepancies himself. As each one was found he admitted it and said that was the last, said Sir Arthur Donnelly. The inspector had been told by Woodward that he had not put money back into the firm for repairs and for the wages of a manager.. Since he had not done this he considered he was paying too much in taxation. He had also said that some of the money had been paid to the employees as bonus payments, but if this was correct neither the employees nor the firm had shown the bonuses on their income tax returns.

For Woodward. Mr. Gresson said that over a period it had to be admitted that Woodward had failed to make returns of about £12,000. He accepted that responsibility and knew that he had to be punished for it. Referring to the bonus payments. Mr Gresson said that the particulars of the bonuses had not been disclosed because they would involve other persons. He was given to understand, however, that the bonuses had been paid.

Before the Income Tax Department began its investigations, Woodward ceased the suppression of sales. A misunderstanding on the part of Woodward's accountant accounted for Woodward’s personal expenses being charged to the firm. It had not been done knowingly by Woodward, said Mr Gresson. It was in Woodward’s favour that he had made no attempt to destroy his records of sales and gave every co-operation to the inspectors. Speaking on the question of penalty, Mr Gresson said that arrears amounting to more than £BOOO had been paid. The penalty for making false returns rested in the hands of the Commissioner of Taxes and he had the power to impose triple tax. As Woodward would probably receive severe punishment at the hands of the Commissioner, he asked the Magistrate to be lenient in imposing the penalty. “Evidently this was a fraud on a grand scale, and the penalty must be in proportion,” said the Magistrate, when imposing the penalty.

TARANKI FARMER FINED £7OO

(New Zealand Press Association) NEW PLYMOUTH, July 30. William Blake West, a farmer, of Koruratahi, was fined £7OO by Mr W. Carrol Harley, S.M., in the Stratford Magistrate’s Court to-day for wilfully making false returns of income for nine years. The discrepancy in returned income was more than £12.000 and tax deficiency more than £5900.