IRD News

Christchurch construction boss given 14 months’ jail for tax evasion

Posted 01 November 2017

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A Christchurch company director has been sentenced to 14 months in prison for misappropriating nearly $370,000 in tax deductions from his employees’ wages.

John Edward Clancy, 52, was sentenced yesterday in Christchurch District Court on 12 tax evasion charges relating to Hanguk Business Investments One Limited (formerly Global Renovations Canterbury Limited). The company provided construction services and had only registered as an employer in June 2014.   Over 12 monthly periods from August 2014 to July 2015, Clancy failed to pass on to Inland Revenue most of the deductions made from his workers’ wages, such as PAYE tax, KiwiSaver contributions, and student loan repayments.

David Udy, Inland Revenue’s Group Manager Collections, said Clancy’s actions showed utter contempt for the tax system. It appears he thought it was fine to deprive New Zealanders of money that funds the public services everyone benefits from, by shuffling money from one of his companies to another, Mr Udy said.

“Mr Clancy chose to keep his businesses afloat by paying trade creditors with the tax he deducted from his workers’ wages,” Mr Udy said. “On many occasions there were sufficient funds to pay the PAYE obligations, but he chose not to. About $1.5 million was transferred from Hanguk accounts to the defendant’s other companies during the period of offending.”

Clancy is an experienced director and was fully aware of his tax obligations. Yet during the past two years, he had been the director of seven companies placed into liquidation – owing a total of $2.2 million to Inland Revenue.

Hanguk was put into liquidation in November 2015 by Inland Revenue and it seems unlikely that money will ever be recovered, Mr Udy said.

“At least this sentence sends a strong message that it’s not okay for employers to play fast and loose with money that is deducted from employees’ wages.”

Media contact: Pete van Schaardenburg 021 348696