The
High Court dismissed a tax appeal by David Henderson finding him personally
liable for $1.7 million GST unpaid by companies he controlled.
In a money-go-round engineered by Mr
Henderson in 2008, GST collected on the sale of property to Christchurch City
was absorbed into a newly formed company leaving the vendor companies insolvent
unable to pay GST due.
The High Court was told Mr Henderson’s
Property Ventures Ltd together with related companies sold land to Christchurch
City in August 2008 with $1.7 million GST included in the sale price. Before any money was handed over, Mr
Henderson formed a new shell company, ILR Holdings Ltd and had ILR purchase for
a price of one dollar debts owed by the Property Ventures group totalling $14.9
million. Once paid by Christchurch City,
Property Ventures paid a net balance of $3.26 million across to ILR leaving
Property Ventures with no assets to pay GST due of $1.7 million. IRL used most of this $3.26 million to pay
subsequent operational costs of Property Ventures. Smaller sums were paid out for the personal
benefit of Mr Henderson and his partner: $320,000 to companies associated with
Mr Henderson and $55,000 to clear a debt he had personally guaranteed; $306,000
to a company associated with his partner and $235,900 for GST owed by her
company.
Justice Gendall ruled the Taxation Review
Authority was correct in holding Mr Henderson personally liable for Property
Venture’s unpaid GST liability. As
director of the Property Ventures group, Mr Henderson had entered into an
arrangement having the effect of leaving the group insolvent. Mr Henderson was
adjudicated bankrupt in November 2010.
Henderson
v. Inland Revenue – High Court (24.08.16)
16.132