Two directors of the Christchurch firm Russley Engineering Ltd have been given home detention terms after admitting tax offences totalling $415,000.
The firm was placed in voluntary liquidation by the shareholders in April 2012, but the pair continued in business with Steam Solutions Ltd which also went into voluntary liquidation in August 2014.
Andrew Edward Batchelor, 52, and Mark Francis Groufsky, 53, both engineers, each admitted two representative charges of knowingly failing to pay tax deductions or withholding tax to the Commissioner of Inland Revenue.
Defence counsel for both men, Simon Clay, said they had $50,000 in a trust account which could be paid immediately towards reparations, and Christchurch District Court Judge John Strettell them to pay $100 each a week back to Inland Revenue for the next five years.
That would mean they repaid a total of about $100,000 of the $415,000 which was the total reparations bill.
Judge Strettell suggested to prosecutor Heather McKenzie that the Commissioner could take civil action against the men to recover the rest of the money if he wished.
The judge said it was an aggravating feature that the pair had set up another company “and proceeded on the same basis” after the first company went into liquidation.
But he said they were men had also operated other successful companies in Christchurch, providing employment for many people, and supporting their families.
He accepted that the offending had happened when the men’s companies were in difficult financial circumstances. “This was not only brought about by their own endeavours,” said Judge Strettell. “It was partially the result of a failure of others to meet financial obligations to these companies.”
The offending had caused a substantial loss to the taxpayers of New Zealand and deterrence and accountability were the primary motives for imposing sentence.
Both men were charged with aiding and abetting the two companies to commit the tax offences.
They were joint directors of Russley Engineering Ltd from December 1998.
The company failed to account for $323,433 to the Commissioner for PAYE deductions, child support employer deductions, Kiwisaver employer deductions, student loan employer deductions, and superannuation cash contributions from August 2009 to April 2011. It made some payments during that period, but then Steam Solutions Ltd also failed to account for $132,331, although it also made some payments.
The total amount not accounted for was $415,455.
The men admitted non-payment of the PAYE was due to “cash flow issues”. An analysis showed that only once out of 36 tax periods was there enough funds to pay the taxes.
Judge Strettell put both men on home detention for nine months and ordered the reparations.