Bar owner defrauds IRD of nearly $1 million

The Taupo bar owner has admitted defrauding the IRD of nearly $1 million. Photo / iStock

A Taupo bar owner who once played for the Junior All Blacks has admitted defrauding the Inland Revenue Department of nearly $1 million.

John Neville Williams, 58, also a former Waikato lock, and Raewyn Anne Stewart, also 58, his partner and bar co-owner, today admitted five representative jointly laid charges relating to tax, GST and PAYE evasion by their company Stewart Drake International Ltd, which owned the bar, JJ's @ On Tap.

Williams, who was adjudicated bankrupt in the High Court at Rotorua on Wednesday, also admitted an additional charge of failing to file income tax returns and filing false ones, while Stewart admitted another charge of failing to file income tax returns.

Their offending stretched from April 1, 2008, to November 30, 2014, and totalled $911,311, including late-payment penalties and interest. The amount of core tax evaded was $441,174.

Court documents state the company had a history of filing or making late tax returns or making no payments at all. It was sentenced in 2010 for six offences relating to the filing of late tax returns.

Williams had filed PAYE tax returns in relation to up to four employees for the bar, which was also known as On Tap, but an IRD investigation later uncovered that up to 10 had been working there.

The couple, who are also well known in horse-racing circles, were responsible for the management and operation of the restaurant and bar. Williams oversaw banking, employment and tax affairs. Stewart worked in the restaurant and kitchen but had access to the company bank account.

On October 22, 2013, Inland Revenue executed search warrants at the restaurant and at the couple's home, where investigators discovered a diary containing details of the pub's daily sales between January 1 and October 21, 2013.

An analysis of the diary discovered an additional $157,706,11 worth of sales that were not declared in GST returns.

Data recovered from the cash register showed the company received, on average, 29 per cent of its sales in cash. However, only 3 per cent of cash takings were deposited into its bank account.

The couple also received cash payments that were not recorded through the till.

Williams told IRD investigators that the company's PAYE tax returns were prepared by a third party; however, he refused to reveal their details.

He also refused to identify all of his staff and became agitated when asked about customer payments made into Stewart's account; he walked out of the interview.

When questioned, Stewart said Williams was responsible for preparing the tax returns. She admitted owning the diary and making its entries.

IRD investigators also interviewed staff. One admitted that she was paid "under the table", while others mentioned the names of people for whom PAYE tax returns had never been filed.

Williams and Stewart were convicted by Judge Chris McGuire and remanded on bail for sentencing next month.

The couple face a maximum of five years in prison or a $50,000 fine on each charge.

Stewart Drake International Ltd was put into liquidation in September last year.