Russell $400m tax case back in court

Businessman John Russell, 80, in his office at his Kawakawa Bay home, Auckland. Photo / Jason Oxenham

An 80-year-old accountant being chased for a $442 million tax bill has his case return to the High Court today in an ongoing wrangle over whether Inland Revenue should have to take a payment deal from the octogenarian.

John George Russell's tax debt - the bulk of which is interest and penalties - has ballooned from $74 million to more than $400 million in little over a decade.

The IRD in June won a judgment for $367 million against Russell, who developed a template that the Court of Appeal called a blatant tax-avoidance scheme.

Inland Revenue now intends to bring bankruptcy action against Russell, who is not giving up the fight against the department.

Russell has proposed three different settlement offers in the past eight years and alleges the rejection of these were not fair or reasonable. One was for him to pay a lump sum payment of $150,000 and another for him to pay $1000-a-week back against the debt for the rest of his life.

Russell has filed for a judicial review over this refusal and last August successfully stalled the IRD from bringing bankruptcy action against him.

But the IRD is today trying to have that judicial review application struck out by Justice Raynor Asher in the High Court at Auckland.

It is understood that the IRD is also appealing the decision that put a hold on any bankruptcy action. This challenge is due before the appellate court in May.

Between the late 1970s and 2000, Russell established what the Court of Appeal has said was an "elaborate, maze-like structure of companies, partnerships and trust", and provided advice on how others could avoid tax through their participation in the Russell template.

The IRD argued that through the use of a partnership, Russell avoided paying tax on income earned through Russell template transactions.

It reassessed Russell's personal income and said he should have declared income of $15.76 million between 1985 and 2000 instead of $298,700.