A judge has sent a powerful message about tax payment failures with a 25-month jail term for the director of two Christchurch companies that had been giving out accounting and tax advice.
Raymond Martin Kesha, a 49-year-old salesman, is now an undischarged bankrupt with no ability to pay back the $195,991 he owes for failures over 94 tax periods during four years.
Christchurch District Court Judge Tony Couch made it clear that a good reputation would carry only limited weight with a sentencing judge when offending had gone on for so long.
He accepted that submission from Inland Revenue Department prosecutor Virginia Diefenbach who said that offending over such a long period “dis-entitled” Kesha for any sentence reduction. He had received a warning from an IRD inspector in 2014 but the offending had continue for another nine months.
Defence counsel Margaret Smyth said the north Christchurch resident was “a stable and honest family man”, who was assessed as having an issue with poor problem-solving skills. Funds that had been available to make the PAYE payments had been used “to keep his staff afloat”.
Kesha had kept going in the hope that things would “come right”. She urged that a home detention sentence be imposed. He was training for work with EQC and was offering to pay reparations.
Kesha was the sole director and shareholder of Be Smart Accounting, and Be Smart Group, which also ran a Northcote business, Ray’s Café. Both companies provided accounting and taxation services to individuals and small businesses.
The companies were placed in liquidation in March 2015 on the application of the Commissioner of Inland Revenue. They owed $230,946 to the commissioner but made a late payment of about $35,000, which reduced that total to $195,991.
The unpaid money was for PAYE deductions, Kiwisaver employer deductions and contributions, student loan employer deductions, and for superannuation cash contributions.
Judge Couch said there had been default on 94 payments over four years, often at times when the companies had enough funds to make the payments.
“The implication of that is that you diverted the payments to other uses deliberately,” he told Kesha. “You were in the business of providing accounting and taxation services – you were well aware of the tax obligations and the financial position.”
The offending involved serious breaches of trust. Money deducted from employees’ wages was held in trust for the commissioner and it was not appropriate to use it for any other purpose. Failure to make the payments also meant losses for the employees.
There was no prospect of reparation because Kesha was an undischarged bankrupt.
The offending was premeditated. “By making repeated defaults on a regular basis over an extended period of time you were clearly following a pre-determined course of conduct.”
He had been told of Kesha’s previous good conduct, and had been handed references, but he said: “Because of the sustained offending over an extended period, I can give only limited weight to them.”
He reduced the sentence for Kesha’s early guilty pleas to five charges of aiding and abetting the companies the divert the tax payments to other purposes. The sentence he imposed was two years and one month, which is outside the range where home detention can be considered.