INCOME TAX EVADED

Manawatu Herald, Volume XLVIII, Issue 3635, 7 May 1927, Page 3

INCOME TAX EVADED

DEFICIT OF THOUSANDS

£SOO FINE INFLICTED. “Last week, when a Palmerston North chemist was fined the maximum penalty, I said that his was the. worst case I had ever handled. At that time I had not gone into the present case, which, I am bound to say, is the most glaring I have dealt with, both in the disproportion between the real income and the amount returned and between the tax paid and the tax due.” These remarks were made by the Assistant Crown Solicitor (Mr. J. M. Tudhope) in the Magistrate’s Court, Wellington, yesterday, when E. R, B. Holben, of Palmerston North, admitted having wilfully made false income-tax returns for the five years ended 31st March, 1926.

The income returned for the period was £3658, instead of £23,638, and the tax paid was £33, when it should have been £2755. There was therefore a deficiency of nearly £20,000 in the income returned and of £2722 in the tax paid.

Only five informations had been laid, said Mr. Tudhope, because of the statutory limitation. Trading as Holben and Kirk, the defendant was in a large way of business as an importer and manufacturer and dairy engineer. He and Mrs. Kirk commenced business in 1896, and carried on till 1919, when Holben bought out his partner. From that time he seemed deliberately to have set out to evade paying income, tax. Counsel wished it to be distinctly understood, however, that Mr. Kirk was in no way connected with the defalcations, and had been absolutely dissociated from the business since 1919. Investigation further back than 1922 showed that in the preceding two years the defendants income had been understated by about £2OOO. Mr. H. R. Cooper (Palmerston North) : “That has nothing to do with the case.”

Mr. Tudhope: “Although charges have of necessity been laid only in respect of the last five years, I submit that I should go further back to show the seriousness of the matter.”

Counsel added that a fine was not the real penalty to a wealthy man. The real penalty was the exposure of the methods he had employed. In this case the circumstances were the worst he had ever known. The defendant had since 1922 deducted £5900 from his income by attributing large sums to the payment of fictitious workmen.

Mr. W. G. Riddell, S.M.: “I don’t know that that makes any difference. The figures speak for themselves.”

Mr. Cooper said his client had placed'large sums in a reserve fund to meet large anticipated liabilities. He regarded this money as a trust fund.

The Magistrate: “There must have been deliberate evasion, and when one says that, the matter is ended so far as the court is concerned. The only thing that remains to do is to hx the penalty, and in this case it must be the maximum one.”

Defendant was convicted and fined £IOO on each of the five charges. Costs £lO 10s were allowed