Tradies sentenced to jail for $1m tax evasion

The tax offences by the builder and the plasterer totalled almost $2 million. Photo/123RF.

Two tradesmen have been sentenced to prison for each evading nearly $1 million in tax.

Hamilton plasterer Paul Andrew Mills was sentenced on February 9 to two years and one month, while Auckland builder Hamish Paul Aegerter received a sentence of two years and seven months last Friday.

Mills' was sentenced on 11 tax evasion charges for offences committed between the 2009 and 2017 tax years.

Aegerter's was prosecuted for three representative charges of filing false GST and income tax returns, and failing to file returns.

According to Inland Inland Revenue Legal Services Leader Karen Whitiskie, Mills hadn't filed any income tax or GST returns during the nine-year period and also failed to pass on his employees' PAYE when he became an employer. In total, he was liable for $996,107 in GST, income tax and PAYE on undeclared earnings of nearly $3 million.

"Mr Mills charged his clients GST but never passed that on to Inland Revenue. He deducted PAYE from his employees but never passed that on either. And he didn't file an income tax return for nearly a decade," Whitiskie said.

The IRD said Aegerter had existed largely outside the tax system for 17 years.

When he filed some income tax returns, he grossly under-reported his income. For one six-year period he returned income totalling $230,717, but bank records showed he had received $2.5 million.

A wider investigation into Aegerter's affairs showed he had evaded a total of $879,340 in tax, including failing to pass on $630,682 in GST he'd charged his clients. Bank deposits into company accounts over this period totalled more than $7 million.

"This was a deliberate and calculated abuse of the tax system by these tradesmen," Whitiskie said.

"The consequences of their actions were that they deprived other New Zealanders to the tune of just under $2 million in tax revenue. That's money could have gone towards funding a range of important social services everyone benefits from. It is really disappointing these tradesmen thought this behaviour was acceptable."

Whitiskie added that business facing difficult circumstances should approach the IRD instead of hiding income.

"We recognise that sometimes businesses will get into difficulties. In such cases, people should come and talk to us and we can discuss their options," she said.