Big pay-back follows restaurateur’s tax convictions

Well known restaurateur Jonny Schwass borrowed $130,000 from relatives so that he could make a significant reparation offer at his sentencing on tax charges involving more than $300,000.

The payment – made available to the court by his lawyer – means that employees will have their KiwiSaver contributions paid, and the Inland Revenue Department will get the rest.

When Schwass pleaded guilty in March the Christchurch District Court was told that employees would lose $13,870 for unpaid KiwiSaver contributions.

However, Judge Raoul Neave today made sure that they would be paid. He made a reparation order which specified that the Kiwisaver payments would be paid into employees’ accounts once Inland Reveue had received the total payment.

Tax department senior prosecutor Paul Saunders said there would not be a problem with the reparation money being handled in that way.

Defence counsel Simon Shamy said the core debt to the tax department after the company went into liquidation in May 2017 was $314,757 but late payments brought the figure down to $265,000.

Forty-six-year-old Jonathon Charles Schwass pleaded guilty in March to 21 charges involving misapplying tax payments totalling more than $300,000 before his company BTS Restaurants Ltd went out of business last year.

At that time, the court was told that a large amount of money may be paid to the Inland Revenue Department before the sentencing.

He had admitted two charges – containing 21 offences – involving aiding and abetting BTS Restaurants Ltd to misapply tax deductions or withholding tax that had to be paid to the Commissioner of Inland Revenue over 21 tax periods from 2015 to 2017. The unpaid money included PAYE, child support, student loan, and KiwiSaver contributions.

When he was interviewed in August, he said the tax money had been used for operational expenses and priority had been given to trade creditors.

Schwass put his Harlequin Public House restaurant and bar in the central city up for sale in 2016. He had established the restaurant in mid-2013 in the restored Ironside House, a large heritage weatherboard house on the corner of Victoria and Salisbury Streets.

Mr Shamy said Schwass had raised $130,000 for reparations by borrowing from relations. It was the maximum he could get. He said the case had attracted a lot of media attention and asked the judge to consider the coverage as “an additional punishment”.

Judge Neave said Schwass had kept trading to keep the company afloat and preserve people’s jobs. “You aren’t the first business to fall into this trap,” he said. “You were effectively trading on other peoople’s money.”

Schwass had not lived an extravagant or exorbitant lifestyle and he had been involved with charity work. He had been co-operative with the tax officials.

He reduced his sentence for his good character, his charity work, reparations, and guilty pleas, and imposed six months of home detention at his home in Parklands. He ordered six months of post-detention conditions and made the $130,000 reparation order.

Inland Revenue spokesperson Tony Morris said Schwass had used the money deducted from employees’ wages to pay creditors to keep trading.

“He was effectively using money that should hve gone towards paying for important social services as a free loan to keep his business afloat. That’s completely unacceptable – the money employers deduct from staff wages is held in trust on behalf of the Crown. It is not theirs to use, because it belongs to taxpayers,” he said.

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