Charges Of Making False Income Tax Returns

Chronicle (Levin), 3 November 1949, Page 6

Charges Of Making False Income Tax Returns

WELL1N GTON, Nov. 2. Evidenee for the defence was given today wlieu the hearing of iive charges of wilfully makiiig false returns of in; come tax against Rotowax, Ltd., was continued before Mr H. J. Thompson, S.M., in the Magistrate 's Court. . The charges allege that the firrn understated its returns to the extent of £10,159 over a period of five years from 1942. The prosecut'ion, wliich is being condgeted by Mr W. £L. Cunninghain, stated that £3458 11s 8d was the tax due .ou the alleged diserepancies. Mr W. E. Leicester, openiug the case for the defence, said a large amount of tax was in dispute, and that in view of the possibiiity of it being multiplied by four, the importance of the proceedings to the company could be readilv realised. He dealt item by item with allegations made by the.prosecution and said that. where the returns were defective it would be shown that they were defective inadvertently and not because of wilfuliuess. (Joncerning the revenue receivfed from the paper that had been salvaged from a hre in the firm's premises in 1942, Mr Leicester said the insurance hrius had regarded the paper as a totai loss. The paper had been the propertv of customers of Rotowax, Ltd!, and these firms had been compensated by their respective insurance companies. The directors of Rotowax, Ltd. (llarold Edward Taylor and Frank llarold Fullerton and John O'Connor), worked on this paper in their own spare time, said Mr Leicester. They salvaged some of it at a time when paper was in short supply and easilv sold it. The company aud its employees had notliing to do with this paper, and the revenue from it was paid into a second bank account iield jointly by the directors. In any case, continued Mr Leicester, the directors and an accountant, wlio had been consulted, considered that this had not been a taxable sale. There could be no suggestion of wilful evasion of tax iu this instance. « The company also had "no interest in the sale of salvaged iuk made by the directors. The company, therefore, could not be regarded as having wilfully l'ailed to disclose this item in its returns, Mr Leicester submittcd. In evidence, M. Morrison, a partner in the liriu handling the accounts'of Rotowax, Ltd., said he compiled the company 's returns from the iuformation given him by the company. VViiat he produced was what he had been tohi. It was a bombshell when he was told about the company 's secohd bank account. 11 e innuediately contacted Tay lor and sent to the Tax Departinent all the information he received from the company; Taylor, .in evidence, said in his opinion there was no obligation to pay tax on the saies of salvaged goods. II e said the mouey in the second banking account acted as a guarantee to the first

■ l ■ t— account. Taylor said. he knew very little about taxation and had no iutention of avoiding tax payments. The case was adjourned and no date , iixed for resumption.