Company Fined £2l0 For Tax Offences

Press, Volume CIII, Issue 30453, 29 May 1964, Page 12

Company Fined £2l0 For Tax Offences

Fines totalling £2lO were imposed on the National Creditmen’s Association (South Island), Ltd., by Mr K. H. J. Headifen, S.M., • in the Magistrate’s Court yesterday on five charges of wilfully making false returns of income.

Pleas of guilty were entered on all charges by Mr P. T. Mahon on behalf of the company. Mr N. W. Williamson prosecuted for the Department of Inland Revenue.

Frank Blundell Wright, a company director, was fined £2 on each of five charges of aiding and abetting the company to make false returns of income. Pleas of guilty were also entered to these charges by Mr Mahon. The five charges related to the years 1955 to 1959 inclusive, Mr Williamson said. An investigation by an inspector of the department had shown a deficiency of £5719 in the income declared. Tax of £l7BO and a social security charge of £2Bl were evaded. The company had a capital of 7000 £1 shares, of which 6400 were held by F. B. Wright, 500 by J. B. Wright and 100 by the New Zealand Creditmen’s Association, Auckland. The National Creditmen’s Association (5.1.), Ltd., was in business as a credit inquiry centre and as a debt collector. Profits were made principally from commissions obtained out of money collected. All money was paid into the company’s trust account, on which Wright drew during the year. On September 3, 1959, notices were sent by the Department of Inland Revenue to Wright advising him that his affairs and those of the company were to be investigated. On September 22 Wright and his advisers called upon the District Commissioner of Taxes and told him that income had been understated, Mr Williamson said. Two Methods Two methods hack been used —falsifying the closing journal entries in the company’s books and not paying money from the Dunedin branch into the company’s bank account. This money was retained by Wright. The five charges against Wright of aiding and abetting, were subsidiary to the charges against the company but it was submitted that they were fully justified, Mr Williamson said. Wright was a separate legal entity from the company

and it was contended that some of the blame and stigma should be attached to him personally. Mr Mahon said the company’s record and accounts before 1955 were in order. In 1955 Wright, the controlling shareholder, began to commit these offences, not to defraud the Inland Revenue Department but because of a private dispute over a claim against him which he considered unjustified. Wright was perfectly frank with the inspector. Wright was associated with a number of other companies, none of which had been in trouble

regarding income returns. The company would be substantially penalised by penalty tax. “Prosecuted Twice” Dealing with the charges against Wright, Mr Mahon said that in effect Wright was being prosecuted twice for the same offence. A request would have been made to have Wright discharged without conviction under section 42 of the Criminal Justice Act but there was , a minimum penalty. The company was fined £l5 on the charge relating to 1955, £25 on the 1956 charge, £5O on the 1957 charge and £6O on each of the charges of 1958 and 1959. The Magistrate said that the tax involved in the last two years was considerably greater. The Magistrate said he agreed with counsel that the charges against Wright really involved the defendant in aiding and abetting himself. The minimum penalty of £2 was imposed on each charge.