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High-earning IT consultant gets two years' jail for not paying income tax and GST

An independent contractor from Dunedin has been sentenced to two years and two months in jail after racking up more than $685,000 in debt to the taxpayer.

David Alexander Nicholson had been working as a self-employed independent contractor in the IT sector since early 2007, yet hadn't filed income tax or GST returns for most periods up until March 31 2011.

Bank records show Nicholson earned in excess of $200,000 in some of these years, working as an information technology consultant for companies based in New Zealand.

Inland Revenue Investigations and Advice Manager Tony Morris said Nicholson has habitually evaded his obligations, having previously been adjudicated bankrupt at the request of Inland Revenue for unpaid child support debt.

“This is possibly one of the most blatant cases of tax evasion by an individual that we’ve come across for some time,” Mr Morris said.

“He has showed utter contempt for the tax system over a lengthy period of time, by repeatedly refusing to comply with his obligations."

“Once he came to our attention, he refused to provide any records while being audited and was wholly uncooperative throughout the process.”

While a registered bankrupt, Nicholson issued false invoices using another taxpayer’s IRD number and the earnings were funnelled into his wife’s bank accounts to avoid being captured by the Official Assignee.

Once Nicholson was tracked down by Inland Revenue in late 2011 for further child support debt, he registered for GST and did file an income tax return for the following year.

However, subsequent to that he reverted to his non-compliant ways and has since failed to file income tax and GST returns.

Nicholson did enter into an instalment arrangement to repay some of his historic debt after being audited by Inland Revenue but then failed to meet his ongoing obligations, so he now owes taxpayers $685,368 including penalties and interest for GST and income tax.

“New Zealanders need to know that we will track down people like Nicholson and hold them to account. We won’t let them get away with ripping off honest, law-abiding taxpayers.”