Company Charged With Evasion Of Taxation

Wanganui Chronicle, 3 November 1949, Page 6

Company Charged With Evasion Of Taxation

WELLINGTON, Last Night (P.A.) —Evidence for the defence was given today when the hearing of five charges of wilfully making false returns of income tax against Rotowax Ltd., was continued before Mr. H. J. Thompson, S.M., in the Magistrate’s Court. The charges allege that the firm under-stated its returns to the extent of £lO-159 over a period of five years from 1942.

The prosecution, which is being conducted by Mr. W. H. Cunningham, stated that £3458 11s 8d was the tax due on alleged discrepancies. Mr. H. E. Leicester, opening the case for the defence, said a large amount of tax was in dispute and that in view of the possibility of it 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. Concerning the revenue received from the paper that had been salvaged from the fire in the firm's premises in 1942, Mr. Leicester said that 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 Lid. (Harold Edward Taylor and Frank Harold Fullerton and John O'Connor) worked on this paper in their own spare time, said Mr. Leicester. They salvaged some of it at 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. In evidence. M. Morrison, a partner in the firm handling the accounts of Rotowax. Ltd., said he compiled the company's returns from information given him by lhe company. What he produced was what he had been told It was a bombshell when he was told about lhe company’s second bank account. He immediately contacted Taylor and sent to the Tax Department all the information he received from the company. Taylor in evidence said that, in hi.opinion, there was no obligation to pay tax on the sales of salvaged goods. He said that, money in the second banking account acted as a guarantee to the first account. Taylor said he knew very little about taxation and had no intention of avoiding tax payments. The case was adjourned and no date-fixed for its resumption.