Home detention for director who avoided $58k PAYE payments

Former Velox Security Ltd director Donna Mckay was sentenced to eight months' home detention for not paying PAYE in a nearly three-year period. Photo/File

A Hamilton security company director who repeatedly failed to pay tax on her employee's wages has narrowly avoided jail.

But Donna Mckay was given a final warning when she appeared before Judge Glen Marshall in the Hamilton District Court on Tuesday.

Aggravating her offending was the fact she set up a second company, Velox Security 2015 Ltd, after the Inland Revenue Department had already discovered her initial company, Velox Security Ltd, was not paying its PAYE.

Velox Security staff were those at the centre of a massive brawl in the Hamilton CBD in February.

Hood Bar owner John Lawrenson confirmed the company's staff were involved. The company's contract was cut the Monday after the fight.

Mckay's lawyer David Hayes said reparation hadn't been offered or suggested by his client, but IRD prosecutor Daniel Phillips said the department was aware of the second company being set up so were able to recover all of the outstanding money, about $25,000, being incurred while it was in operation.

That meant that although $83,000 was outstanding, about $25,000 was recovered through deduction notices. In the end, $58,249.57, of PAYE was left owing.

But Mckay put up a fight. Before her case going to trial, she admitted nine aiding and abetting tax avoidance charges but defended a further 21.

Judge Marshall found her guilty on all but one.

Hayes said the offending came about due to the company's financial circumstances in a market which has substantial labour with minimum wage workers.

"The employers seem to get into trouble. The tax unfortunately does not get paid. Without minimising what's happened here, it's not the same sort of situation in tax terms of filing a false GST return. The correct figures were supplied to IRD but the money just wasn't paid when it should have been."

He accepted she had previous dishonesty convictions but they were about 23 years old.

But Phillips urged the judge to put the offending in context: Mckay has previously been investigated and given prosecution warnings in relation to the first company, yet she continued and then set up the second company, with her son-in-law as director, after the prosecution was launched.

"The taxes were due and the taxes were not paid and the defendant was responsible for that. PAYE offending was over 30 months involving two companies and the defendant tried to distance herself from the company."

Judge Marshall said Mckay was well experienced in the security business and was "well aware of her PAYE obligations".

Her offending involved a breach of trust which left New Zealand taxpayers greatly affected.

In handing down a sentence of eight months' home detention and 200 hours' community work, the judge told Mckay she was lucky not to be going to prison.

"I can tell Ms Mckay, had there been losses attracting to the second company then it would be unlikely that I would be considering anything other than a full custodial sentence.

"That's because in my view accountability and deterrence on a personal level as far as Mckay is concerned would be warranted to discourage her from offending in a similar nature in the future."

He said there appeared to be "little prospect" of any reparation being paid but said the department was within its right to pursue civil action.

"Ms Mckay would be well placed to take warning of any further offending of a similar nature as any further offending would almost inevitably lead to imprisonment."