IRD wins $8.2m judgment against tax lawyer Garry Muir

Trinity was a forestry investment scheme offering investors a 50-year tax holiday. Photo / File

The architect of the Trinity tax scheme owes $8.2 million to Inland Revenue, a High Court judge says.

Auckland tax lawyer Garry Muir devised and set up the Trinity scheme, which in 2004 was ruled to be a tax-avoidance arrangement - a decision upheld by the Supreme Court four years later.

The IRD at the time claimed the scheme would have cost taxpayers up to $3.7 billion over its 50-year lifespan.

Muir disputes the tax-avoidance conclusion but the Inland Revenue says he has exhausted his challenges to income tax assessments.

IRD is suing him for unpaid taxes, interest and penalties between 1997 and 2010 and says Muir owes $8.2m

The tax department, in June, applied in the High Court for summary judgment against Muir over the alleged debt, claiming he had no defence to its claim.

Muir argued that IRD's application was premature as he still has legal action on foot challenging the tax assessments.

Muir also said Associate Judge Roger Bell - who was hearing the case - should recuse himself for alleged bias or predetermination.

Associate Judge Bell said Muir's challenge in the Taxation Revenue Authority and the High Court has "been determined by the decisions of the authority, this court, the Court of Appeal and the Supreme Court."

"His final liability has been determined and his income taxes have become payable," the judge said.

"As the challenges have been determined, it is futile for Dr Muir to continue to dispute the assessments. These new pleadings are no more than shadow-boxing," Associate Judge Bell said.

The judge said that IRD had shown that Muir does not have any arguable defence to its case for the unpaid tax, interest and penalties between 1997 and 2010 and that those debts amounted to $8.2m.

He entered judgment against Muir for that amount and ordered him to pay IRD costs.

Muir's lawyer, Robert Hucker, told the Herald the decision was being appealed.

What was the Trinity tax scheme?

• A forestry investment allowed each participant to license land from the Trinity Foundation for 50 years to plant a crop of Douglas fir.

• The fee was $2 million, or about $40,000 per year.

• Although the $2m was not to be paid until 2048, it was immediately tax deductible to the investors.

• So the investors effectively claimed a deduction of $40,000 each year.

• The result was a 50-year tax holiday for investors - most of whom would have been in their 90s or older by the time they were due to pay the tax.

• Between 200-300 taxpayers were involved, although most settled with the IRD before a High Court judgment in 2004 deeming the scheme a tax-avoidance arrangement.