Property flipping couple lose in case after $1.7m arrears ran up

A couple ran up tax debts after buying and selling dozens of homes. Photo / 123RF

A couple who ran up tax debts of over $1.7m on dozens of property sales have failed in their bid to have an Inland Revenue decision and a court ruling overturned.

The Court of Appeal has upheld the rejection of an application for a judicial review by Veena and Yagashwar Singh and says complaints against the commissioner of Inland Revenue were rightly rejected by the High Court.

In reasons released today, appeal court judges said the Singhs were asked in 2008 about undisclosed property transactions and volunteered they had bought and sold 16 properties in less than two years to March, 2004.

However, Inland Revenue found the couple had in fact bought and sold 40 properties, 39 of which related to the 2003-2007 tax years that were subject to an audit.

The value of the transactions was more than $8 million and the Singhs agreed to make "tax adjustments" to cover the years covered by the audit.

In 2011 Inland Revenue obtained judgement against Veena Singh of $619,730 and Yagashwar Singh of $574,106.

"These debts included unpaid income tax, unpaid GST, overpaid family assistance benefits, use of money interest and shortfall penalties for gross carelessness," the judgement said.

Bankruptcy proceedings were started and then withdrawn in 2014. The couple made a formal request for financial relief under the Tax Administration Act.

The couple claimed they were in serious financial hardship and entitled to a tax write-off. Although the combined debt had risen to $1.75m the commissioner was prepared to accept a payment of $649,482.

The couple then made repeated requests for financial relief and after their offer of $70,400 to settle the matter, the commissioner refused and set bankruptcy proceedings in 2015.

The couple challenged the decision to decline relief in the High Court but this was dismissed and the Singhs appealed to the higher court.

The Court of Appeal ruled that there were no grounds for the claim that the High Court decision was biased.

"The contention is hopeless," the judges said.

They also ruled the alleged failure to take into account the Singhs' inability to make mortgage payments was rightly rejected.

"Even taking into account the mortgage arrears, the information provided suggested that the Singhs must have been paying their other living expenses from undeclared income," the judges said.

It would be up to the High Court to determine whether it was just and equitable to make and order for adjudication taking into account all relevant considerations.

"We are satisfied that the challenge to the commissioner's decision to decline the Singhs' request for financial relief was without foundation and the judicial review proceedings were rightly dismissed."