MFEM v TTN Group Ltd [2012] CKHC 70; CR154-159.11 (29 March 2012)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CRIMINAL DIVISION)

CR NO'S 154 - 159/11
178 - 133/11
184 - 189/11

MFEM

v

TTN GROUP LTD

Hearing: 29 March 2012
Counsel: Ms Henry for the Crown
Mr Williams on behalf of the Defendant

Sentence: 29 March 2012

SENTENCING NOTES OF THE HONOURABLE TOM WESTON CJ

[1] TTN Group Limited is before me today for sentencing having pleaded guilty through its director Mr Williams to a large number of breaches of the tax legislation in relation to VAT, PAYE and failure to file Annual Returns. There are 18 separate charges. There are 6 in relation to each of the three topics that I have mentioned.

[2] I notified counsel for the Collector that I know Mr Williams and therefore if there was an objection to me being the sentencing judge, that should be made. The Collector, through counsel, advised there were no such concerns.

[3] Mr Williams who appears for himself was happy for me to proceed and indeed anxious that the matter should be disposed of. He said on a number of occasions, as he addressed the Court, that it had been his intention to have this matter resolved just as soon as possible and that it had dragged on through no desire of his.

[4] Mr Williams has candidly accepted that there is no real excuse for his failure to comply with the law. He runs a successful business. He employs a large number of people. The impression I have gained is that because the Collector was not pursuing him at any stage, he simply let the matter ride until the Collector finally did something.

[5] While the primary obligation is on the taxpayer to pay tax, I do observe that in this case, the Collector, it seems, has failed to pursue Mr William's company until recent times.

[6] It also seems there have been arrears of tax from an earlier period, and recently the company has paid a figure $246,859.22. That sum does not relate to the present amount of indebtedness.

[7] I understand the Collector has assessed that the current arrears, plus penalties, are in the region of $600,000. Mr Williams thinks the correct figure is probably less but until the returns are completed he cannot be sure. He tells me he has now made arrangements with the Collector to finalise those returns and there will then need to be arrangements made to pay outstanding moneys.

[8] The incentive is clearly upon Mr Williams to get that organised if he believes the total amount owing is less than $600,000.

[9] Ms Henry for the Collector did not disagree with the amounts of money mentioned by Mr Williams, nor as to the general points as to the process being followed by the Collector and Mr Williams.

[10] In sentencing TTN, clearly I need to give effect to the principle of deterrence. The company, it seems, could have paid its various tax obligations but chose not to. I am also conscious, though, that there is no point imposing penalties and fines upon a taxpayer that effectively forces it to cease business. I am also conscious that earlier tax arrears have been paid and that Mr Williams is now complying with his obligations in relation to the VAT, PAYE and Tax Returns.

[11] Earlier this morning I sentenced another company at the low end, indeed at the bottom end of the scale. That company too was in breach of VAT, PAYE and Tax Return obligations. The figures that I used there were $100 for the first period, and then $200 thereafter for each VAT breach, and $1000 in relation to each of the PAYE and Annual Return breaches.

[12] The circumstances of Mr Williams' company mean that the figures that I should fine the company are greater than those in relation to the previous taxpayer. However, for all the reasons that I have mentioned, I do not think this is a case where they need to be significant fines.

[13] Consequently, in relation to each month of the first period of VAT breaches, the fine is $150 per month. It is then $300 per month for every following month.

[14] In relation to each of the PAYE and failure to file Returns, it is $1300 per relevant period. I have not done the calculations for this. The total figure will be less than that sought by the Crown which was $44,000.

[15] Mr Williams had submitted that if I were to fine the company $44,000 he would need up to two years to pay. I have fined the company less than that, and I think in those circumstances a period of instalment payments over 18 months, which is a year and a half, would be appropriate. Mr Williams should work out the monthly payments that are required, and then make sure automatic payments are made to the Collector accordingly.

[16] There need to be Court costs in addition to this. So Mr Williams your company needs to pay 18 lots of $30 in addition.

_________________________
Tom Weston
Chief Justice

Editorial Note: Derived from the Court's electronic records and believed to be correct and final.