Restaurant failed to pay $80,000 in tax

Press, 11 July 1989, Page 14

Restaurant failed to pay $80,000 in tax

PAYE deductions totalling more than $BO,OOO have not been paid to the Inland Revenue Department by Christchurch’s Shangri-La Restaurant, the District Court was told yesterday. Shangri-La Restaurant, Ltd, and a shareholder, Andrew Poh Sim, both admitted 13 charges of failing to account monthly to the department for PAYE deductions from employees’ wages. Judge Frampton adjourned sentencing to August 7 after Sim indicated overseas investment may soon result in the arrears being paid. Mr Chris McVeigh, for the Inland Revenue Department, said Sim was a shareholder in the Durham Street restaurant and was directly responsible for PAYE payments. Mr McVeigh said anyone who employed staff was obliged under the Income Tax Act to deduct PAYE tax from their wages and account for these to the Inland Revenue Department before the twentieth day of the month following that in which the wages were paid. From April, 1988, to April, 1989, the defendant employed staff and ought to have deducted and accounted for their PAYE.

Mr McVeigh gave the Judge a table giving a monthly breakdown of the PAYE deficiencies. During the 13 months, the gross wages paid totalled $447,790, from which the company had deducted $88,275.45 as PAYE tax. Of this, $6429.82 had been forwarded to the department, leaving a shortfall during the 13 months of $81,845.63. The $6429.82 was paid for April, 1988, but was deficient by $496.37. No PAYE was paid during the following 12 months. Mr McVeigh said the total PAYE arrears as at May 25 this year stood at $98,004.02 and the total outstanding to the department for all revenues was $186,261.93. Mr McVeigh said Sim was asked for an explanation by the department. Sim said the company had experienced severe cashflow problems and had paid other creditors with the PAYE money. “He stated that although he deducted the PAYE at the time of paying wages, he had since paid it out to his creditors, so by the twentieth of the month following he had no money left. “The company has had a long history of late payments of source and other deductions to the

department and these are the third prosecutions for the company, and the third prosecutions for Andrew Poh Sim.” Mr McVeigh said Sim had at all times been cooperative during interviews and in obtaining company records. Sim told the Court: “The restaurant business over the last 18 months has suffered tremendously because of the economic slump. I wasn’t able to meet all the commitments because the turnover has dropped in the last 18 months.

“To stay in business I decided to pay the creditors and suppliers first. I know it was wrong of me not to pay the tax department. “I consider if I stay in business I have a chance to survive, make money, and pay back the tax department.” Sim said he hoped he would finalise some overseas investment in the company within two weeks, which would allow payment of the money owing. Judge Frampton convicted Sim and the company and adjourned sentencing to August 7 to see if the arrears could be paid. This, said the Judge, would be relevant to sentencing.