WANGANUI FIRM FINED SUBSTANTIAL SUM FOR FALSE TAX RETURNS

Wanganui Chronicle, 21 June 1949, Page 6

WANGANUI FIRM FINED SUBSTANTIAL SUM FOR FALSE TAX RETURNS

Fines totalling £225 were imposed by Mr. S. S. Preston, S.M., in the Magistrate’s Court, Wanganui, yesterday, after Martin Bros, and Bain, Ltd., Wanganui, for whom Mr. R. S. Withers appeared, had pleaded guilty to live charges of making false returns of income. The fines ranged from £l5 for the first charge, in respect ot the year ended March 31. 1943, to £75 on the fifth charge, which related to returns for the year ended March 31, 1947. Mr. K. R. Horsley, who appeared for the Crown, said that the five informations related to false returns of income for the years ended March 31. 1943, 1944, 1945, 1946 and 1947. The company's returns were the subject of an investigation by the department on an unexplained increase in the income of the principal shareholder, Thomas Flannigan. The total deficiency in taxation over the live years was £943 0s Bd, Mr. Horsley added. For 1943 the income returned was £428 4s 4d, but the in come assessed was £ll7B 15s, the deficiency in taxation being £l9l 8s 4d. For 1944 the income returned wan £468 15s 4d and the income assessed at £1243 10s Bd, leaving a taxation deficiency of £202 16s Bd. In 1945, the income returned was £458 4s lOd, the amount assessed being £1629 12s lOd, and the taxation deficiency £330 18s 9d. For 1946 the return was £702 9s sd, the amount assessed being £ll9l 4s 3d and the deficiency in taxation being £lO9 6s lOd. for 1947 the returft was. 12s Bd, the amount assessed being £640 6s and the deficiency £lBO 0s Id. These amounts were exclusive of penalties for late payment, and a further amount of £429 10s was outstanding in social security charges, said Mr. Horsley. The company was engaged in the manufacture of librus plaster board and at one stage Flanmgan acquired all the shares with the exception of one. He deposited considerable amounts in his Post Office Savings Bank account and also in National Savings. In later years his salarv was banked in a lump sum, which indicated that he had some other source of income. It appeared that he had done some work in his own time for which cash payments were made. Mr. Horsley added that Flannigan made no attempt to cover up the income and was co-operative with the department during the investigation. At one stage he told an inspector that he had always had a feeling that “you chaps would check up.” The department took a serious view of the case because the discrepancies were consistent and the amounts were considerable. The trouble began during the war years when defendant was shprt staffed said Mr. Withers. H e was on his own and things started to get into a muddle. The magistrate* What is the capital of the company? Mr. Withers: The capital is £l2OO. It is not a large company. Counsel added that defendant got I into such a state that in* did not. know where he was. He made no attempt to hide any of the amounts, however, and openlv deposited money in the Post Office Savings Bank and in National Savings, which could be checked. The department had experienced no trouble in ascertaining the amounts.

Asking the Court to view the matter as leniently as possible, Mr. Withers added that the question of the penalty tax for late payments still remained for the Commissioner of Taxes to decide. Since 1933 the firm’s books had been taken over by a public accountant.

“These cases are not easy for the Court to deal with,’’ said the magistrate. "The Court woes not have the final decision as to what the total penalty will be. The commissioner has that sav and irrespective of what the Court does he can impose penal tax. The unfortunate part is that these proceedings get publicity, but the commissioner’s final decision is nor known to the public.’’ The fact remained, however, that the defendant must have known tnat the returns were false. In addition, the offence had been a continuing one. Furnishing false returns of income was a serious matter and not easy to detect without a large staff of inspectors. A fine of £l5 was imposed on the first charge, £3O on the second, £45 or. the third, £6O on the fourth and £75 on the fifth. Crown solicitor's fees amounted tn £2 2s on each charge and Court, costs 10s, a total of £l3.