Magistrate’s Court Man On Six Charges Of False Income Returns

Press, Volume XCVII, Issue 28552, 3 April 1958, Page 11

Magistrate’s Court Man On Six Charges Of False Income Returns

A man alleged by the Crown to have understated his income by £4871 between 1953 and 1957, a figure which represented a deficiency in income and social security taxes of £1522, appeared in the Magistrate’s Court yesterday on six charges of wilfully making false returns of income. He was Walter Alan McPhail, aged 48, a retired carpenter (Mr E. S. Bowie).

The hearing was adjourned and counsel for both parties will present their submissions in writing before the Magistrate, Mr L. N. Ritchie, S.M., gives his decision.

Mr P. T. Mahon, who prosecuted, said that since 1946, the defendant had derived income from the sale of property, rentals from property and the sale of motor cars and trucks. Last year, Donald Gunn, an inspector employed by the taxes division of the Inland Revenue Department,

investigated the defendant’s affairs for a period of 11 years ended March 31, 1957. It was found that his assets were substantial and that it was difficult to reconcile them with his returns of income. His income had been understated in all the years with the exception of one, but the prosecution was confined to the last six years. Between 1953 and 1957 the total understatement of income was £4871, representing a deficiency of income and social security faxes of £1522, said Mr Mahon. Profits from sales of properties amounted to £1162 but the prosecution was concerned only with the remainder, £3709 which was wholly derived from the defendant’s sale of motor vehicles.

In the period of 11 years investigation had shown that 58 motor vehicles had passed through the defendant’s hands, 36 since 1953. Returns of income to the department disclosed dealing in vehicles in 1955, 1956, and 1957. The number of vehicles disclos-

ed in this period was 19 and the defendant had dealt with 25, said Mr Mahon.

When the investigation was completed and the result was shown to the defendant’s accountant the latter was surprised at the extent of his client’s dealings. A reply from the accountant to the customary letter from the department asking for information on the deficiences gave explanation of the defendant's dealings in property but vehicles were not mentioned. There was no worthwhile record of the matter in the defendant’s possession. Although he did have a bank account no cheque butts were retained and he operated on it very infrequently. Mr Mahon said it was admitted that the defendant did carry large amounts of cash from time to time. Dealings in Vehicles The details of his dealings in motor vehicles were obtained from the motor registration branch of the Post Office. Necessarily, only those recorded in his name were included and 58 was the minimum number, said Mr Mahon. In cross-examination Gunn agreed with Mr Bowie that when the investigation began the department was more concerned with the dealings in property. In 1955, when it was alleged the defendent sold 10 vehicles and disclosed nine, the tenth vehicle

could have been his private car and it was possible that the 1955 return was correct.

In the three years from 1955 the defendant bought considerable assets but in addition to cash in hand, sales of property yielded substantial profit. His assets, it was alleged, grew by £5OOO but the above sources would explain the apparent increase and the seeming discrepancies. Witness agreed that it was possible. The defendant was co-operative within the limits of his records, and none of the stock excuses, such as a heavy double win, were offered in explanation. To Mr Mahon witness said that he took the defendant's statement that at different times he would have as much as £3OOO cash on hand to refer to his business as a cash dealer.

In evidence the defendant said he bought houses with the intention of letting them. The first was bought in 1935 and his reasons for selling the houses were the cost of alterations, or trouble with tenants. He understood from an aeent that any profit made was not taxable. As regards vehicles, he said he changed his private car frequently and from 1955 all returns on dealings were correct. He did not know, until he was told by his accountant, that it was necessary to make returns on any profit made. The defendant said that like his father he “did not like banks” and always kept a considerable amount of cash in a tin buried in his garden. The reason for keeping it was in case he wished to buy property or motorvehicles. To Mr Mahon the defendant said that he thought he had told the inspector that most of the cars and trucks were for his own use. He had no other job and lived off his property investments and vehicle dealing. Told that in the 11 year period his assets had increased from £5OOO to £15,000, he said he did not realise the rate of accumulation. Mr Mahon: I put it to you that you are a shrewd businessman. Defendant: Am I? I don’t know. I do a lot of silly things. He denied, in reply to a further question, that he had consistently attempted to defraud the department. The hearing was then adjourned. FINES OF £lOO Fines totalling £lOO were imposed on Ronald H. Sutherland <Mr B. J. Drake) who was convicted on four charges—two of selling taxable goods when he was not a licensed wholesaler and two of failing to pay sales tax with intent to defraud. Mr C. M. Roper who appeared for the Collector of Customs and Sales Tax, said inquiries in Auckland had shown that the defendant had been selling taxable goods, had charged sales tax on the invoices but had not accounted for it to the department. He had since paid the whole of the tax, £146 18s Id. and had applied and been granted a wholesaler s licence. His explanation was that he had charged sales tax on the articles and not knowing what to do with it, had kept it in trust until asked for it.

Mr Drake submitted that the defendant was a businessman with an unblemished reputation and was engaged mainly in the manufacture of goods not in any way taxable. If he had applied for exemption on the grounds of the small quantity of the taxable articles concerned, he would have almost certainly been granted it. Because the minimum penalty would have to be imposed Mr Drake submitted that if one of the charges were withdrawn the penalty would be adequate for the justice of the case. The defendant was fined £25 on each of the four charges. ONE MONTH’S GOAL

When leniency was extended it was expected that the person on probation would respond and at least observe the conditions of the probation said the Magistrate when he sentenced Robert John Bailey, aged 24, to one month’s imprisonment on a charge of failing to notify a change of his address.

A probation officer said that the defendant had also been ordered to make restitution by the Court but had made no response. He was released on probation on January 27 this year. Inquiries had shown he had left his former address and he was arrested at Motueka this week. SOCIAL SECURITY OFFENCE On a charge of knowingly applying or permitting to be applied £l4l 8s social security charges for other purposes, Boyd Neville Buzan (Mr B. J. Drake) was fined £lO. Mr C. M. Roper appeared for the prosecution. TRAFFIC OFFENCE On a charge of driving a motor vehicle without due care and attention Joseph Harry. John Annan waa convicted ana fined £5.