Errol Taylor
Errol Taylor

It's Our Job To Drive You Under

I was first registered as an electrician in 1962, and for the past 30 years have specialised in the repair of small domestic electrical appliances. Vacuum cleaners, heaters, toasters, microwaves, mixers, etc. I became self-employed in 1977. Our business was set up as a partnership, my wife and myself, running the business on my own in the basement of our home. I am also a musician having been playing publicly in bands etc. in Taranaki since 1953, but now working as a solo entertainer playing a keyboard and singing, and earning an income from it. (I ain't no Mario.) Our accounts had been done for some years by the firm of HR Block and by an accountant they had doing work for them, but whom we had never met. The system seemed to work well for some years, but it changed about 1988 when H. R. Block became Taxlink and the new firm had a 'live in' accountant whom I had known casually for some years and who was now to become very important to us.

In February, 1990 I was told that we were to be audited and that the interview could be at our accountant's office or at our home. I could not see any advantage of taking up our accountants time, so the two hour 'interview' took place at out home, over the odd cup of coffee. It was all very friendly and I had nothing to hide. Being a very small business, there COULD be nothing to hide. It was however a little embarrassing to admit that the business had suffered a downturn during the 1987 year in comparison to previous years. This was due mainly to the 'restructuring' of large firms following the 'crash'. During the interview we were asked, "What is your hourly charge out rate?" I explained that with small repairs a 'set' hourly rate does not work and that the time on the job is charged more on the merits of the job and there are certain swings and roundabouts involved. If I had to put a figure on it I would look at around $34 p/h, but that figure could not be 'across the board.' At the conclusion of the interview we were asked for records pertaining to the year 1986. (Note the 1990 figure of $34 per hour was later extrapolated over the 1986/87 books when at that time the actual charge rate was closer to $22 per hour). The female interviewer reported back to us about 3 months later, that she had found a discrepancy of $200. She said that she was happy to ignore the small amount but that her supervisor had told her to "keep digging."

A further ten months went by and I received a 10am phone call from her telling me that, "Things don't look good for you. We have set up a meeting at your accountant's office at 2pm today — BE THERE."

We arrived on time and waited 25 minutes for the IRD pair (she plus her supervisor) to show up. They told us they were not going to beat around the bush and that we owed the IRD $67,000. When I gathered my breath, they were still there. Our accountant asked how on earth they had arrived at the figure. He was as stunned as we were. I asked if that was their share of my earnings, where was mine?! They then pushed a wad of papers to us and told us it was "all in there." They repeatedly told us that if we admitted "diverting large amounts of money from the business to my wife's account" and if we pleaded guilty there and then, and if we settled their "assessment" of $67,000 there and then, things would go much better for us. They were very insistent about "settlement" and even suggested at one point of the meeting that if we agreed to pay $27,000, they would accept that and "call it quits" and "no further action would take place." The supervisor accused my wife of taking "large amounts of money" from the business, and depositing it in small amounts into her personal account. These small amounts were very easily proven to be small documented amounts of holiday pay paid out for the overtime hours worked by her at NZ Post. Even after proof of this there was no apology from the IRD. At no time did they ever do an asset test on our property or us.

Our accountant set out to prove that the labour rate was in fact lower than that assessed by the IRD. The female interviewer told him that if he were able to prove his figure, she would just increase the number of hours worked so as to arrive at the same figure she had assessed. (A statement the senior investigator later admitted at an interview we had with him and which I recorded (with his permission) in which he added that what she had said "was not a good choice of words.")

At 9.30am on the 30th October 1992,the female investigator phoned to say that a "wrong set of assessments" had been posted to us and would I please dispose of them? She had realised they were wrong but as they had already been posted, she could not retrieve them. I was not sure which forms she meant because at that time we were getting up to six pages of computer printouts a day, all in separate envelopes. I kept an eye out for these "assessments" but they did not arrive until the middle of December. I handed them to our accountant; I was not destroying anything.

On 25th November, 1992, I was phoned by another female at the department and told that an amount of $22,397.79 was wanted immediately. This was a NEW figure and I told the woman to put it in writing to our accountant.

On June 3rd 1993, at 7.45am I was phoned by yet another female from the Debt Collection Dept of the IRD demanding $25,641.77. I told her I would call her back when I was in a position to take notes (not when I was having breakfast). When I phoned the IRD ten minutes later I got their robot telling me that I had phoned out of hours and to call back after 9am. We had by now decided to place the matter in the hands of the Taxation Review Authority, a move that the Department initially tried to block. Our accountant suggested we pay an amount of $15,000 as an act of good faith to get the review hearing rolling. I took a cheque for the amount to the Department and in a locked room they were concerned that I would not hand over the cheque to the investigator and the female from the Debt Collection Dept, until a receipt had been written out.

At 7.05am on June 1st 1994 I was awoken by a phone call from the same female from the Collection Dept demanding the immediate return of some asset forms. (Later in the day we verified that they had been returned some months previous and WERE NOT REQUIRED). At that hour I did not use the words 'harass' or 'Gestapo' but believe me they came to mind.

In Jan. 1994 the Dept clapped an automatic debit on my wife's bank account for $135 per fortnight which remained in force until May 1994. To this day we do not know what that was about.

On 3rd April 1995 the Taxation Review Authority set up Court in the Devon Hotel, New Plymouth. Judge Willy from Christchurch, and a registrar from Wellington, flew into town for a hearing set down for four days. My wife, our accountant and myself, opposed the local Crown Prosecutor, the supervisor from the IRD plus the head of the Audit Dept. By 11.30 and with myself in the box, the Judge was appearing weary from the nonsense so far presented and suggested to the Crown Prosecutor that the words 'assessed' and 'assumed' were being used an awful lot, but very little 'fact' was under discussion. He suggested that during the lunch break the Department should get its act together.

At one stage in the morning session, I explained how I did my banking at the end of the day through a TSB Money Machine. Simply, after I inserted my card the window opened (older machine), I would hit the deposit button, key in how much I was banking, and an envelope would appear. I would then have to complete the details on the envelope, during which time the window would close and a 'too slow' message appeared. After completing the details I would reinsert my card and duplicate the procedure only this time I could complete the transaction by inserting the envelope in the receiver slot in plenty of time. Later in the afternoon, the prosecutor waved a banked statement around and had it passed to me via the judge. He questioned me about a figure that appeared in the deposit column twice in succession. I pointed out to him that the first was when I started the transaction the second was when I completed the transaction and if he looked in the withdrawal column he would see the reversal caused when the machine closed down. The prosecutor's face dropped, the taxmen started shuffling in their briefcases, and the judge grabbed his head and I thought for a moment he was about to tear his hair out. He adjourned the hearing and told the taxmen to "come back tomorrow and have it right!"

At 8.30, a phone call from our accountant that he had done some more homework during the night and was about to blow the tax case apart some more was well received by us. At 10am we were at the hotel alone. At 11am the prosecutor arrived at the hotel in a cab, minus his brief case. He told us that our accountant was still at the Tax Department "going hammer and tongs," and he (the prosecutor) was on his way to ask the judge for a further adjournment, which he was granted till 2pm. By this time the Department had withdrawn by far the bulk of their information against us. An agreement had been reached amounting to a figure of approximately $1400. It should have been even smaller but it was a far cry from the $67,000 first mentioned. The judge passed comment that he was pleased that such an agreement had been reached and he would reserve his decision until the "parties sorted out and signed the final figures." His parting comment was: "Let that be an end to the matter."

Seven weeks later the Crown Prosecutor had still not delivered the papers to us for signing, so I wrote to him and told him that although I had phoned and left many messages for him, it was obvious to us that he was simply delaying procedures. Within a few days the forms arrived at our accountant's. That should have been the end of the matter; but there's more.

The Dept do not like to be beaten, so some 12 months later, they revisited the original $200 discrepancy and extrapolated it over five years inclusive, and laid charges against us of "Wilfully Making False Income Returns." The first District Court Day came and I appeared along with my lawyer only to find that the Department had not notified the lawyer what we were being charged with. No 'discovery' had been made. The judge told the Dept to get the information to us by the next court day a month later. Next court day nothing had turned up. The judge made a further adjournment of yet another month. The information arrived 24 hours before the next sitting, causing a further adjournment of another month. All this time our lawyer's meter is ticking over like an immigrant cab driver's meter. I had by now just about had enough and asked the lawyer what would be the worst scenario if I changed my plea to guilty for the sake of expediency. He thought maybe $200 per charge. He agreed that his costs were building up rapidly. I decided that even though we knew we were NOT GUILTY, it might just be the least expensive way out in the long run. Once in court the lawyer put the proposition to the judge and spoke well for us. The judge handed down a fine of about $250 plus costs on each of the five charges. About $1800.

THAT should have been the end of it but, some months later, the department advised us that as we had now pleaded guilty, they were going us for the $200, plus penal tax plus penalties. It is not over to this day (January 11, 1999).

I strongly believe that no matter what we do in the future, they will NEVER let us get on with life and will never take note of Judge Willy's exhortation to "Let that be an end to it."

As Lindsay might say, once you've crossed them, the TrIRDs will never leave you alone.

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