Construction boss jailed after tax evasion
A building company boss has been jailed for 14 months for misappropriating nearly $370,000 in tax deductions from employee wages.
Company director John Edward Clancy, 52, was sentenced on Tuesday in the Christchurch District Court on 12 tax evasion charges relating to Hanguk Business Investments One (formerly Global Renovations Canterbury).
Over a 12-month period the construction company head failed to pass on to the Inland Revenue Department most of the deductions made from his workers’ wages, including PAYE tax, KiwiSaver contributions, and student loan repayments.
David Udy, Inland Revenue’s group manager of collections, said Clancy showed utter contempt for the tax system, keeping his businesses afloat by paying trade creditors with money that should have gone to the tax department.
‘‘It appears he thought it was fine to deprive New Zealanders of money that funds the public services everyone benefits from, by shuffling money from one of his companies to another,’’ Udy said.
‘‘On many occasions there were sufficient funds to pay the PAYE obligations, but he chose not to.
‘‘About $1.5 million was transferred from Hanguk accounts to the defendant’s other companies during the period of offending.’’
He said Clancy, an experienced director, was fully aware of his tax obligations but over the past two years seven of his companies had been placed into liquidation owing $2.2 million to Inland Revenue.
Hanguk was put into liquidation in November 2015 by Inland Revenue and it seemed unlikely that the money would ever be recovered, Udy said.
‘‘At least this sentence sends a strong message that it’s not OK for employers to play fast and loose with money that is deducted from employees’ wages.’’
Clancy filed for bankruptcy and was adjudged bankrupt in March last year.
His construction group was involved in several large residential projects in Christchurch, including work for Housing New Zealand.
The group also left the Christchurch City Council more than $200,000 out of pocket for unpaid development contributions and building consents in relation to plans for residential units.
Udy said additional government funding had allowed Inland Revenue to put more focus on debt recovery. In the year to the end of June, PAYE debt reduced by almost 28 per cent on the previous year to $309.7m.
Over the past two years there had been 55 prosecutions based solely on the withholding of PAYE deductions.