DEFENCE OFFERED TO CHARGES OF TAXATION EVASION

Gisborne Herald, Volume LXXVI, Issue 23092, 3 November 1949, Page 6

DEFENCE OFFERED TO CHARGES OF TAXATION EVASION

(P.A.) WELLINGTON Nov. 3. Evidence for the defence was given yesterday at the hearing before Mr. J. H. Thompson, S.M.. of five charges against Rotowax Ltd. of wilfully making false returns of income-tax. The charges allege that the firm understated its returns to the extent of £10,159 over a period of five years from 1942.

The prosecution, which is being conducted by Mr. W. 11. Cunningham, stated that £3458 11s Bcl was the tax due on the alleged discrepancies. Mr. W. E. Leicester, in opening the case for the defence, said that a large amount of tax was in dispute and that, in view of the possibility of its being multiplied by four, the importance of the proceedings to the company _ could readily be realised. Mr. Leicester dealt item by item with the allegations made by the prosecution. He said that where the returns were defective it would be shown that they were defective inadvertently and not because of wilfulness.

Salvage From Fire

Concerning revenue received from paper that had been salvaged from a fire in the firm’s premises in 1942, Mr. Leicester said that the insurance firms had regarded the paper as a total loss. The paper had been the property of customers of Rotowax Ltd. and these firms had been compensated by their respective insurance companies. The directors of Rotowax Ltd. (Harold Edward Taylor and Frank Harold Fullerton and John O'Connor) worked on this paper in their own spare time, said Mr. Leicester. They salvager some of it as a time when paper was in short supply and easily sold it.

The company and its employees had nothing to do with this paper and the revenue from it was paid into a second bank account held jointly by the directors.

In any case, continued Mr. Leicester, the directors and an accountant who had been consulted considered that this had not been a taxable sale. There could be no suggestion of wilful evasion of tax in this instance. The company also had no interest in a sale of salvaged ink made by the directors. The company, therefore, could not be regarded as having wilfully failed to disclose this item in its returns.