A Hawke's Bay restaurant owner who evaded more than $800,000 in tax payments has been jailed for two and a half years.

Rakesh Kumar was investigated by Inland Revenue after a total evasion of $833,294 between 2009 and 2016, and faced three charges of tax evasion.

His wife Nalini Kumar also evaded $127,029 of taxes over a five-year period.

She was sentenced alongside him today to five months home detention and 100 hours community work by Judge Max Courtney at the Hastings District Court.

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The Kumars are well-known business owners, who ran dairies and restaurants, including the Indian Palace in Napier.

The Kumars' lawyer, Rachel Scott, said Nalini's offending was down to "naivety" as she was "unaware of the liablities".

She had no previous convictions, and showed "sincere remorse", which her repayments showed.

Judge Courtney noted her early guilty plea and "good judge of character", as well as the effect a jail sentence would have on her family.

IRD lawyer Amanda Bryant told the judge Nalini Kumar had paid the full amount she owed this week.

Although her husband had also been making repayments, he still owed a total of $483,346.

Bryant said Rakesh Kumar's actions were "premeditated" and that he was "aware of his actions", which were significant for this type of offending.

She noted officials from Inland Revenue worked tirelessly on the investigation, which took them a total of four years.

They originally showed interest in Kumar's companies after they returned large income tax losses and low cash earning reports.

He would often pay his employees in cash and would not list them in Inland Revenue Employer schedules.

Addressing Rakesh Kumar, Judge Courtney said the tax system relied heavily on "honesty and integrity" and his behaviour was a bad example to other businesses.

Courtney noted his early guilty pleas and previous good character, and sentenced him to two and half years in prison with no reparation order.