WAGES TAX NOT PAID

Press, Volume LXXXIX, Issue 27147, 17 September 1953, Page 14

WAGES TAX NOT PAID

BREACHES OF SOCIAL SECURITY ACT

“These cases are very different from other cases which have come before the Court in the past, in that there was no attempt to evade paying the tax,” said Mr A. W. Brown, for the Commissioner of Inland Revenue, when John Raymond McCaughan was prosecuted in the Magistrate’s Court yesterday on four charges of applying to another purpose the Social Security charge payable in respect of employees’ wages. McCaughan, for whom Mr K. A. Gough appeared, pleaded guilty to the four charges which concerned £7l 5s 6d deducted in 1950, £ll2 2s Id deducted in 1952, £97 14s deducted in 1951, and £7l 3s lOd deducted in 1953 from employees’ wages and not paid to the Social Security Department. Mr F. F. Reid, S.M., convicted McCaughan on the'first charge and, fined him £5. He convicted McCaughan on each of the others and ordered him to pay costs. * , Mr Brown said the charges were brought under tfie Social Security Act, 1938. McCaughan carried on business as the Al Bottle Exchange. Up to 1948 his books were well kept and the wages stamps were duly entered. After that there was neglect. There was some arrangement whereby it was left to an employee to pfty the wages tax in some cases and to McCaughan at other times, said Mr Erown. McCaughan entered the wages stamps properly but the employee drew the men’s net wages by cheque, leaving the amount of wages in tax in the firm’s account. This went on for some time and if it had not been detected a considerable amount of tax would have been lost. The report of the department’s inspector said that there was no wrongful intent by McCaughan but it was sheer neglect. “In fairness to McCaughan, I want I to make it clear that the department does not consider there was any real dishonesty. The books are now being | kept by an accountant and the tax has been paid,” said Mr Brown. I Mr Gough said that McCaughan thought his employee was paying the tax and posting the stamps in the book. The employee thought McCaughan would attend to it and so he fell between two stools. The charge was not of defrauding the revenue department. McCaughan had pleaded guilty because he had delegated his powers to an employee and so was vicariously responsible, but it was a technical offence. The department apparently recognised it as such for it had contented itself with recovering only a 10 per cent.' penalty and had not imposed a penal tax of three times the amount, as it could do. McCaughan paid the tax immediately he was told of it. The Magistrate said he was entirely satisfied that there was no question of McCaughan acting deliberately but he was vicariously responsible for the i actions of his employees. The Court was justified in regarding it more as a mistake than as an attempt to evade the tax.