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Media releases

Hastings dairy and restaurant owners sentenced for tax evasion

A Hastings couple, who operated dairies, restaurants and other businesses, have been sentenced to prison and home detention on tax evasion charges totalling nearly a million dollars.

Rakesh and Nalini Kumar operated Red Chilli Restaurants and Take Away in Taradale and Indian Palace Restaurant in Napier together with dairies in Hastings and Mount Maunganui and other businesses.

Rakesh Kumar will spend two-and-a-half years in prison after pleading guilty to providing false returns and evading tax totalling $833,294.99.  His wife, Nalini Kumar, has been sentenced to five months home detention and 100 hours community work after a guilty plea to evading $127,029.60 in tax.

Inland Revenue spokesperson Karen Whitiskie says the couple under-reported cash sales and paid employees under the table over several years.

“Between 2010 and 2016, Mr Kumar’s companies reported substantial losses for income tax and GST purposes. There were also an abnormally low number of cash sales recorded at a time when his bank records revealed substantial cash deposits.

“Mr Kumar also paid his employees in cash and didn’t list them on the Employer Monthly Schedules provided to Inland Revenue.”

Inland Revenue began looking in to Red Chilli restaurant after it showed abnormally low cash sales between 2009 and 2015. Indian Palace also had similar abnormally low cash sales between 2010 to 2015. 

“In one year, the companies’ tax returns stated less than 1% of its sales were cash sales, compared to the industry average of 30%. Both restaurants PAYE returns also understated staff numbers, with Indian Palace claiming only one employee over the busy Christmas holiday season in 2010-2011,” Karen Whitiskie says.

“Defrauding Inland Revenue is not a victimless crime. It’s straight theft from the community and all too common.  Concealing cash sales is just one part of the hidden economy, and an area of concern for us.

“The overall harm is more than just the tax shortfall because Inland Revenue relies heavily taxpayer honesty. Deliberate offending like that committed by Rakesh and Nalini Kumar undermines that relationship and damages the integrity of the tax system.

“As the Court of Appeal has said (R v James), nothing is more corrosive than the sight of people apparently earning high income and evading payment of tax.”

Media contact: Gay Cavill 029 2014 585