Director admits $700,000 tax fraud

A Whitianga company director has admitted avoiding filing tax and GST returns totalling more than $700,000.

Michael Raymond Holmes, 68, was due to be sentenced in the Hamilton District Court on Wednesday but the matter was further remanded by Judge Josephine Bouchier for more probation reports to be completed.

However, a reparation application was heard and Holmes was ordered to pay back the full amount of $773,277.89 to the IRD.

Michael Holmes was convicted of eight charges, including aiding or abetting Danyon Investments Ltd in knowingly providing false GST returns for 1997, with two charges jointly laid with his wife, Sharon Leigh Holmes, 52, relating to Avila Property Investments.

In June 1998, Danyon entered into a sale and purchase agreement of a $2.7 million commercial building in Auckland, the GST component of which was $300,000.

Having been told the purchase went ahead, Danyon was given the GST amount back. The IRD later discovered the vendor scrapped the deal and Danyon was required to file a return and pay back the money. This didn't happen and the money was spent by the company.

When questioned in October 1998, Michael Holmes said he was aware a return should have been filed but he was in a difficult financial position.

Regarding the Avila charges, the company again entered into a $1,852,000 sale and purchase agreement for 10 units of a 61 unit development in Auckland. Avila was also given a GST refund of $205,826.56. Of the 10 units, six were sold, three were bought by a family trust of Holmes and one was not sold. All 10 were required to to pay GST totalling $210,888.89.

And in August 2000, another one of Michael Holmes' companies, Westvue Management Company Ltd, entered into a sale and purchase agreement of a commercial building in Auckland worth $2,362,500, the GST component of which was $262,500.

The final six charges relate to Michael Holmes cashing a cheque for a refund accidentally given to him by the IRD in November 2012.

Instead of telling the IRD, Holmes banked it and proceeded to draw five cheques totalling $252,818.43 which were all used for personal purposes.

As a result, GST worth $773,277.89 was not returned by the due date or paid to the IRD.

Michael Holmes has since been struck off as a director from six companies, but ceased being a director of Hetherington Farms, leaving his wife as the sole director.

At an earlier appearance Sharon Holmes, an accountant, pleaded not guilty to 10 charges, five of which, also laid by the Inland Revenue Department, are alleged to have occurred between 1 December, 2004, and 30 March, 2008.

The charges range from her knowingly providing false and misleading information to the IRD regarding her personal income tax returns, to also allegedly knowingly or aiding her husband to provide false GST returns for his company Avila Property Investments Ltd, and also GST returns for the Hetherington Farms Family No2 Trust and GST returns for Westvue Management Company Ltd.

Sharon Holmes will reappear in court next month.

Waikato Times