Jailed for not passing on employees' tax deductions
David John Gower appeared in the Auckland District Court on May 16 and was sentenced to two years and three months behind bars.
He was charged with aiding and abetting AFS Total Fire Protection Ltd (AFS) in deducting PAYE, KiwiSaver Employer deductions, Student loan employer deductions and child support from employees’ wages – money that was never passed it on to IR.
AFS installed and maintained fire and emergency systems and had about 80 employees.
The company currently owes $108,305.28 unpaid KiwiSaver Employer Contributions and $40,869.21 unpaid Employer Superannuation Contribution Tax. AFS’s workers never got the benefit of that money or any interest on it.
AFS was placed into liquidation at the end of 2016 owing $2,645,500.48 of PAYE debt and $1,373,310.25 of GST debt. That was after IR agreed to hold off on liquidation a number of times to give Gower the chance to stick to a plan for re-payments. But any plans weren’t stuck to.
Despite repeated attempts to contact Gower, and warnings, the offending continued for 17 months after a final warning letter in May 2015.
Gower plead guilty to a representative charge, covering 49 tax periods, a week into the jury trial. Before that plea, the jury was told there are some basic rules everyone follows when they choose to run a business – including paying creditors, paying their staff, and paying tax.
Prosecutors told the jury that carrying on a business without paying taxes is unfair to employees, unfair to other businesses and unfair to other taxpayers.
Gower had been the director of 20 companies since 1989 and admitted he was aware of his obligations as an employer. He has repaid $300,000 in reparation.
Last updated: 21 May 2023