Skip to main content
Media releases

Diaries result in restaurateur being jailed for three years for tax evasion

An Auckland restaurateur whose company evaded more than one million dollars of tax has been jailed for three years.

Khalid Mehmood was sentenced at Manukau District Court this morning after pleading guilty to 144 charges of filing false PAYE, GST and income tax returns for Areeb Khan Foods Limited between 2005 and 2010.

Inland Revenue Investigations and Advice Manager, Tony Morris said it was eight diaries seized by Inland Revenue in 2011 which were his undoing.

The diaries revealed that between April 2005 and September 2010, Mehmood's Salateen Indian Cuisine restaurant in Papatoetoe, and the Kebabs Salateen restaurants in Manukau, and Ward Street in Hamilton, made $2.7million more in sales than what Mehmood declared. He also failed to disclose cash wages he paid to staff.

"Mehmood registered all three of his restaurants for income tax, GST and PAYE." said Mr Morris. "He was fully aware of the rules and knew his actions were illegal.

"The tax returns Mehmood filed were based only on the deposits made to the company bank accounts and staff wages paid by cheque. They failed to show that significant amounts of the restaurants takings were being used to pay cash wages or by Mehmood for his own private use," he said.

Mehmood failed to declare more than $200,000 of income tax, almost $600,000 in PAYE and more than $300,000 of GST.

"Mehmood systematically set out to make gains for himself and his employees to the detriment of other taxpayers," said Mr Morris. "Not content to stop with tax, Mehmood was instrumental in enabling his staff to take advantage of social policy benefits including Working for Family tax credits, income tested benefits and low income housing benefits they were not entitled to.

"Inland Revenue laid charges against Mehmood in 2012, but he made every effort to waste taxpayers' money by delaying prosecution proceedings for almost two years whilst continuing to run his businesses. By putting his assets into other names, he also deliberately hindered Inland Revenue from recovering the tax he owes.

"Mehmood intentionally tried to beat the system by signing declarations stating the content of his tax returns were true. He was caught and we are taking action to recover the money owed.

"In trying to steal taxpayer money from Inland Revenue, Mehmood attempted to cheat New Zealanders who abide by the rules. The money he sought to claim is that used to pay for essential services like schools, police and hospitals," said Mr Morris.