Inland Revenue’s declared plan to chase tax evasion by individuals related in any way to the Masala tax and immigration frauds is starting to bite. Ravinder Kaur is challenging a claim she evaded tax totalling $220,200.
In 2017, an eight million dollar ‘proceeds of crime’ penalty was settled by companies operating the Masala restaurant chain following investigations of tax fraud, immigration fraud and labour law fraud. Inland Revenue says this settlement still allows it to pursue individual taxpayers for tax evasion.
The High Court was told Inland Revenue now alleges Ravinder Kaur evaded tax over a five year period, not declaring as income money from a Masala liquor store used to pay down mortgages on south Auckland properties. Inland Revenue claims tax totalling $220,200 plus penalties of $165,100.
She challenged Inland Revenue’s tax assessment, stating the money received was held on trust and was not her personal income. She further challenges Inland Revenue’s right to go beyond the prior ‘proceeds of crime’ settlement. To further pursue individual taxpayers amounts to double taxation, she claims.
Her tax challenge came to a shuddering halt when Taxation Review Authority ruled Inland Revenue had won by default, closing the case.
Ms Kaur learnt her lawyer had failed to file documents when under an ‘unless order;’ a court order that unless pre-trial documents, already late, are not filed by a set date then the defendant taxpayer does not get a day in court and Inland Revenue’s assessment stands.
‘Unless orders’ are justified as a necessary evil to deal with defendants who treat courts with contempt and refuse to engage in the legal process.
Ms Kaur’s lawyer said he had simply made a mistake. The necessary documents had been emailed to Inland Revenue in time, but the email mistakenly was not copied to the Review Authority at the same time. Inland Revenue said this oversight was not the only problem; the documentation was not properly ordered, left to Inland Revenue to sort out.
Justice McQueen ruled Ms Kaur’s right to challenge Inland Revenue’s tax assessment should not be prejudiced by her lawyer’s incompetence. Her Taxation Review Authority application was re-opened for a full hearing on a date yet to be set.
Kaur v. Taxation Review Authority – High Court (29.09.23)
23.170