Inland Revenue sued

Press, 13 November 1982, Page 7

Inland Revenue sued

PA Auckland The Auckland-based Lemmington Holdings. Ltd. an export investment company. has said that it had issued a writ for more than $32 million against the Commissioner of Inland Revenue. The claim is the largest ever lodged against the Crown in New Zealand. The writ is for $28,256,000 million actual losses and another $5 million for punitive damages for alleged deliberate wrongful conduct by the Commissioner of Inland Revenue.

The Lemmington governor director. Mr Lance Baillie, said that the action was to recover losses suffered by the company because of incorrect advice given by the commissioner. He also seeks $1,050,000 personal damages. The Inland Revenue Department directly approved Lemmington's export investment plan in 1978 and later confirmed it, he said.

It gave specific written

approval for Lemmington investors to use money set aside for tax to finance the manufacture and export of high-quality houseware products. The scheme would never have been launched without a clearance. Mr Baillie said. The department withdrew its approval in 1981 and sought to prevent Lemmington investors gaining the tax benefits to which it had previously said they were entitled, he said. The company and about 350 investors 'began legal action against the department in December last year seeking a decision to the effect that the original advice was correct and the reversal wrong. Mr Baillie said. The case was still before the courts. ■ Meanwhile "the continuing uncertainty regarding the tax status of its investors has left Lemmington unable to promote the export plan and hence completely cut off

from its source of funding." “To survive. Lemmington has had to undertake a drastic dismantling of its business and has had to overcome a number of attempts to have it wound up." he said. The company's legal action will recompense it for its huge losses if successful and establish two principles: Inland Revenue Department accountability for the advice it gives businessmen and taxpayers who legitimately organise their commercial and tax affairs in accordance with it: and Departmental recognition and acceptance of some responsibility for the commercial consequences of its actions and decisions when, as in the Lemmington case. it reverses previous advice and attitudes.. Mr Baillie also said that most of Lemmington's investors had combined to recover their losses from the department by litigation.