Inland Revenue is welcoming the jail term of five years and nine months handed down to Mohammed Wasim for his part in a horticultural industry tax fraud involving more than $15 million.

The Wainuiomata orchard worker was sentenced in the Tauranga District Court by Judge Moore today on 81 counts of tax evasion, in the biggest horticultural industry tax fraud ever prosecuted by Inland Revenue. He is required to serve a minimum non-parole period of three years.

The total tax amount evaded was $15,080,861.

The department began investigating the tax evasion scheme operating in the agricultural contracting industry in 2001. It involved contractors evading GST, PAYE and income tax by claiming work completed for growers by the contractor’s employees had been sub-contracted to other companies.

The court heard Wasim recruited young Pakistani and Bangladeshi men to incorporate companies and register them for tax. Contractors contacted Wasim, known as a ‘money man’, to obtain a tax invoice from one of these companies. These invoices were for work the contractors had completed for growers, and for which they had already been paid.

The contractor paid the invoice, and Wasim repaid the money to the contractor, less a fee for himself.

At least 36 companies are believed to have been used in the scheme. Wasim is the first person to be sentenced in relation to this scheme, but other prosecutions are pending.

Inland Revenue Assurance Manager Raju Budhia said the prison sentence was a very good outcome for the horticultural industry as a whole.”Most contractors run honest businesses, and find it difficult to compete with those who are evading tax.”

”The courts are taking tax evasion seriously,” he said. ”Since January 2005, another twelve Bay of Plenty agricultural contractors have been successfully prosecuted for evading tax totalling more than $4.4 million. Ten of the contractors were jailed, for an average of 21 months.”

Mr Budhia said that Inland Revenue has the skills and resources to detect taxpayers trying to evade their taxes. “We use a wide range of sources and have extensive knowledge of profit levels in various industries.”

Source: Inland Revenue Media Release

Former Rawleigh ML Marketing Limited (RML) managing director Wilbour Terrence Rawleigh has been sentenced to 12 months home detention after being convicted of tax evasion involving $539,123.

Rawleigh earlier pleaded guilty in the Wellington District Court to six charges of aiding and abetting RML to file false GST and income tax returns, and one count each of failing to provide a personal income tax return, and filing a false income tax return, between 1997 and 2001.

The RML company, which is in liquidation, formerly controlled the Rawleigh brand in New Zealand. It was a multi-level marketing company that utilised distributors throughout New Zealand to sell toiletry and pharmaceutical products. RML sold the products to the distributors who could use the products themselves or on-sell them.

Rawleigh set up a company in Vanuatu to administer a range of extra bonus payments to RML’s distributors throughout New Zealand. RML then claimed GST and income tax deductions on these payments, many of which were not paid to distributors. In addition, Rawleigh paid himself substantial bonuses but did not include them in his personal income tax returns.

In 2005, RML was convicted of 29 offences of filing false GST returns and five offences of filing false income tax returns. The following year, former accountant Bill Duncan was jailed for nine months after pleading guilty to 25 charges of aiding and abetting RML in its offending.

Today’s sentencing concludes five years of investigation and court proceedings against RML, its accountant and director. Inland Revenue has recovered most of the tax evaded through the receivership of RML.

RML is no longer associated with the Rawleigh trademark.

Inland Revenue Assurance Manager Raju Budhia said this offending is a clear example of an individual increasing his personal wealth at the expense of others. “This is a case of substantial evasion, with Rawleigh deliberately evading taxes and increasing his personal wealth at the expense of honest taxpayers.

Mr Budhia said the sentence sends a strong warning to others who consider evading their taxes. “Inland Revenue will take firm action against anyone who deliberately sets out to evade their tax obligations.”

Source: Inland Revenue Media Release

Nearly 2300 investors have ended up getting more than 80 per cent of their money back in the final wash-up of the Western Bay Finance receivership.

The final cheques were mailed out this week and, 15 months after the Tauranga-based finance company plunged in to receivership, the investors have been repaid $40.2 million, representing 82 cents in the dollar.

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