Home detention granted for tax offending

Home detention has been granted to hospitality businessman Hayden George Jones for unpaid taxes after the earthquakes brought his pub and brewery enterprises to a halt.

Jones, a 43-year-old father, already had $205,000 available in a lawyer’s trust account to pay reparations before his sentencing by Christchurch District Court Judge Stephen O’Driscoll today.

The payment – more than half the reparations figure of unpaid taxes totalling $381,325 – was a key factor in reducing the penalty Jones faced after admitting seven representative charges just before his trial was due to start in June.

Judge O’Driscoll issued a reserved sentencing decision today after hearing submissions last week. He imposed six months of home detention at a Clifton address, 200 hours of community work, and made an order for the $205,000 reparations to be paid immediately.

The Commissioner of Inland Revenue, which brought the prosecution, accepted that the reparation offered was full payment of Jones’ share. Another person had been involved in the running of the companies but he has not been charged.

Jones ran various bars and breweries around Christchurch and was responsible for the dealings with the IRD.

The companies were Matson’s Brewery NZ Ltd, Swiggers South Brighton Ltd, NZH3 Ltd, Swiggers Hoon Hay Ltd, Matson’s BWS Ltd, The Pier Limited, and the Hibernian Hotel Ltd.

Jones pleaded guilty to charges referring to the seven companies now in liquidation, admitting that he aided and abetted the companies to apply tax deductions totalling $402,441 for purposes other than payments to the tax deparment.

Inland Revenue Department senior prosecutor Paul Saunders said Jones was a director and joint shareholder of each of the companies.

The companies ran businesses around Christchurch during the period of offending between December 2010 and June 2014.

Each of the companies was required to account to the Commissioner of Inland Revenue for tax deductions made from employees’ wages and for other deductions. These included PAYE, Kiwisaver employee and employer contributions, child support deductions, student loan deductions, and superannuation contributions.

The offending occurred over 148 tax periods. IRD’s analysis indicated that tax payments could have been made in full and on time for 76 of those tax periods.

After the earthquakes, the hospitality businesses had been hit hard, defence counsel Jonathan Eaton QC had earlier told the court.

A decision was made to sell the brewery. A sale was negotiated which would have ensured all the tax obligations were met but the purchaser failed to settle. Liquidation proceedings were filed and then advertised, resulting in an effective “fire sale” with significant creditor shortfalls.

IRD said Jones’ conduct prevented the tax department receiving funds from the sale of Matson’s Brewery NZ Ltd. Judge O’Driscoll said: “When the business was sold, distributions from the sale proceeds totalling $389,726 were made to entities related to the defendant in preference to the Commissioner. In addition, a further payment of $95,405 was used to pay trade creditors and no distributions were ade to the Commissioner.”

Judge O’Driscoll decided not to uplift Jones’ sentence because of earlier convictions for commercial regulatory offending, because they were “different in type and nature”.

The judge said he had been asked to accept that Jones was a “puppet” in the latest offending. But he said: “The defendant has accepted, through his guilty plea, that he knew what his obligations were and he failed to meet them to Inland Revenue.”

The judge did not accept any criticism of Inland Revenue for allowing Jones to continue trading over a long period after the tax issues arose. Clearly, the Commissioner wanted to do the best for New Zealand in terms of gaining legitimate revenue owed to the IRD.

“I do not have any problems with the Commissioner making robust commercial decisions,” said Judge O’Driscoll. “Allowing a business to continue trading in the hope that it will trade out of its financial difficulties, or putting a business in the best possible position for sale, makes good commercial sense.”

Since the prosecution, Jones has been working as a real estate agent.

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