Conceptos previos

A media release should convey relevant, precise and educational information that will inform and educate the reader. In respect of the media releases involving the prosecution of taxpayers issued by the Inland Revenue since December 2004, which totalled 96 they were neither informative nor conveyed relevant and precise information.345

342 _{(1986) 8 NZTC 367.}

343 _{For example, Terry Serepisos, a Wellington Property developer and owner of the Wellington Phoenix, a} soccer team playing in the Australian Football league has various companies in debt to the Inland Revenue for some $3.5 million dollars which includes PAYE available at www.nzherald.co.nz/buisness /news/article.cfm (as at 10 March 2011). Given that failure to account for PAYE, it is conceivable that Mr Serepisos and his companies would have faced either a civil penalty under section 141E of the Tax Administration Act 1994, or a criminal prosecution for failure to account under section 143B(1)(D) of the Tax Administration Act 1994. 344 _{See n 221 p 42.}

345 _{Inland Revenue media releases are available at http://ird.govt.nz/aboutir/media-centre/media-releese via} the Inland Revenue web site at www.ird.govt.nz at the icon media. This icon enables the reader to view any

The media releases mirrored the deficiencies which were identified in relation to data integrity (see chapter 5 Para 5.4) in respect of relevant statutory references,346 occupation of the taxpayer,347 amount of funds defrauded by the taxpayer, whether the funds were subsequently recovered by the Inland Revenue,348 and the period the offences were committed all of which were not provided.349 Unlike the listing of prosecutions, when a monetary amount was quoted, often one was unable to decipher whether the amounts involved was a gross amount or actual tax.350 Finally and in line with the commentary by M Cullen,351 the decision to publish the details of a prosecution is discretionary, or whether those details were already published in a local or national newspaper.352

media statements released by the Inland Revenue from December 2004 to October 2010 which was the date this thesis used as cut-off.

346 _{A review of the 96 publications of taxpayers between December 2004 and October 2010 convicted for} offences either under the Crimes Act 1961 or the Tax Administration Act 1994, not one cited the section of those Acts that the taxpayer was convicted under.

347 _{David John Lindup, the sole shareholder and director of a Lindup Holdings Ltd was sentenced to four} years imprisonment after defrauding the Inland Revenue of up to $866,773.82 in GST, none of which was recovered by the Inland Revenue available at http://ird.govt.nz/anoutir/media-centre/media-release2009-06-06 (as at 3 December 2010). Alison Margaret Douglas, a manager of Surf Life Saving Taranaki, was jailed for 3 years 6 months involving 23 charges for failing to make PAYE deductions to the Inland Revenue. The unpaid PAYE amounting to $61,518.61 was not recovered available at http://ird.govt.nz/anoutir/media-centre/media- release2009-05-29 (as at 3 December 2010).  

348 _{Barry and Heather Reid were convicted on the 25 April 2005 for knowingly withholding information from} the Inland Revenue concerning their vacuum cleaning business and the income, PAYE and GST omitted from 2000 to late 2003. No amount was cited as to the extent of income, PAYE, or GST omitted. They received 9 and 6 months imprisonment with the ability to apply for home detention available at

http://ird.govt.nz/anoutir/media-centre/media-release2005-04-25 (as at 3 December 2010). Ahmad Bakhtiar who it was estimated had defrauded the $5,185,441. 00 in GST, PAYE and income tax was sentenced to 2 years 10 months jail in respect of admitting 64 counts of tax evasion and 22 counts of using a document. No details were provided in the media release whether any funds were recovered available at

http://ird.govt.nz/anoutir/media-centre/media-release2009-11-11 (as at 3 December 2010).

349 _{Sandeep Sood was convicted in June 2006 for evading tax of more than $1.5 million dollars involving the} issuing of false invoices to kiwifruit contractors. Although he operated in the Tauranga and Hawkes Bay regions between November 2003 and December 2005, no time period was cited as to when those tax offenses were committed available at http://ird.govt.nz/anoutir/media-centre/media-release2007-06-01 (as at 3 December 2010).

350 _{Robin Claude Smith was sentenced to 10 months jail and 250 hours of community work for tax of almost} $250,000.00 he used two separate books of account in his spray painting business available at http://ird.govt.nz/anoutir/media-centre/media-release2007-01-25 (as at 3 December 2010).

351

 See n 221.  

352 _{Inland Revenue prosecution Framework – states” We will publicise the outcomes of prosecution cases} where we consider it appropriate. When deciding to publicise a prosecution, we will consider the public interest, including deterring future non-compliance, encouraging and reinforcing compliant behaviours and maintaining the community's perception of the integrity of the tax and social policy systems we administer. Brett Knock, an Auckland Accountant was jailed for six years after admitting 14 representative fraud and forgery charges. Knock clients still owe nearly $1 million tax to the Inland Revenue when he defrauded his 

clients out of tax refunds or filed false tax returns for his clients available at www.sharechat.co.nz dated 16 July 2004 (as at 14 December 2010).

Another possible source of prosecution details are the Inland Revenue Department Annual Reports. In the period of July 2004 to June 2009 the number of offences cited was 851. These are set out in Table 6.1.353

It is obvious that out of a possible 851 prosecutions as reported in the Annual Reports Inland Revenue choose to include only 96 in its media releases. What also makes comparison is that Inland Revenue Annual Reports run from a July to June calendar year, whereas the media run from December 2004 to October 2010. Further compounding the issue of comparability is the year the Inland Revenue reports an offence, the period of the offence, or the date of the Court judgment. Subject to these limitations, Inland Revenue failed to disclose some 755 offences during this period.

A further issue relates to the amount of funds defrauded. The media releases of the 96 taxpayers the total amount defrauded equates to $59,416,801.91. The question that one would like to pose is of the other 755 offences listed, what amount of funds were defrauded? Without access to this information, one is unable to determine the full extent of frauds committed by taxpayers who reside at the upper stratums of the Compliance Triangle. A more interesting question in respect of those 755 taxpayers is what funds were recovered if any from the frauds that they committed?

353 _{Inland Revenue Department Annual Reports 2005 -2009. The offence of failing to furnish a tax return has} been excluded from this calculation. In the period the number of taxpayers prosecuted for this offence amounted to 2,656.

Table 6.1 Prosecution 2005 – 2009 as per Inland Revenue Department Annual Reports and Official Information Requests.

Year A B C D E F G H I Total 2005 3 0 2 316 7 2 5 0 0 335 2006 8 4 7 331 11 1 7 0 0 369 2007 3 8 6 0 2 0 9 0 0 28 2008 0 6 25 0 9 2 0 9 1 52 2009 0 6 18 10 11 1 0 20 1 67 Total 14 24 58 657 40 6 21 29 2 851 Key

A False returns or Wilfully furnishing false returns

B Aiding, abetting or inciting to make a false Income tax return. C Aiding, Abetting or inciting to make a false return.

D Failure to Furnish GST Returns E False GST Returns

F Knowingly not proving Information G Fraud GST

H Crimes Act

I Section 17 and Section 17A

If Inland Revenue was truly diligent in its desire to curb criminal tax fraud, it should perhaps release the full extent of its prosecutions each year, convey the appropriate and relevant information as to the level this offending which the notices under section 146 of the Tax Administration Act 1994 originally provided. This request for such publication has been raised previously i.e. as a means “to underscore the seriousness of the offence...and help indicate that these offences carried a higher level of stigma than less serious offending”.354 The lack of publication possibly as a consequence of the application of section 81 of the Tax Administration Act 1994 in respect of its media releases provides an appropriate shield to our society of the full extent of criminal tax fraud in New Zealand.