Director avoids paying full reparation after fleecing IRD

20:27, Aug 07 2014
Michael Raymond Holmes
GUILTY: Michael Raymond Holmes and wife, Sharon Leigh Holmes, leave the Hamilton District Court in May.

A Hamilton judge is powerless to make a former Whitianga company director pay back the $700,000 he fleeced from the Inland Revenue Department.

Michael Raymond Holmes, 68, has been able to hide behind his wife, Sharon Leigh Holmes, from paying the total $773.277.89 to IRD.

She is the only trustee of The Little George Trust that has a $550,000 boat as an asset, which could be sold and the funds used to pay back the tax department.

But the Hamilton District Court, on Wednesday, heard that Sharon Holmes, in a "legal sense", could not be compelled to sell the vessel to pay the money back.

Sharon Holmes also denies 10 charges that are alleged to have occurred during the same period as her husband's offending.

She will appear in court at a later date.


Michael Holmes avoided a jail term after being sentenced to 10 months' home detention after admitting eight charges including tax evasion, theft by a person in a special relationship and aiding or abetting Danyon Investments Ltd in knowingly providing false GST returns for 1997, with two charges jointly laid with his wife relating to Avila Property Investments.

Most of the offending involved similar actions by Holmes; he would sign an agreement for sale and purchase for property, get the GST component refunded back to him, then the deal would fall over and he never paid the GST.

The most serious offending involved his former Westvue Management Company where he was accidentally issued a GST refund worth $249,547.45.

Holmes subsequently spent it.

Holmes' lawyer Phil Morgan, QC, said one of the main barriers preventing his client paying the full amount of reparation was his wife, Sharon Holmes, who was the only one who had authority to sell a boat which could be used to pay back the IRD.

"My client is not a trustee of the Little George Trust," Morgan said.

"He would need agreement of his wife to be able to pay anything . . . he can't compel her.

"Unless she agrees, there's nothing he can do about it."

Inland Revenue Department prosecutor Truc Tran urged Judge Macdonald to give a prison sentence, especially as the department was unlikely to get all of its money back.

Judge Macdonald sympathised with the IRD's position, but said Holmes would avoid prison.

However, he remained sceptical of Holmes' apparent lack of money.

"In the end I feel quite uncomfortable about the situation because it now appears that there are assets out there in the form of a boat exposed in May which had a valuation of $525,000 to $550,000 that could be sold and the money could be applied to the debt to the tax department.

"But strictly speaking, in a legal sense, you have no direct control over that," the judge said.

"You could of course persuade your wife to take some steps to sell that asset, no doubt, but in terms of my position I cannot force the issue as I see it."

Outside court, Sharon Holmes declined to say why she wouldn't agree to sell the boat. 

Waikato Times