Hamilton brothers imprisoned for $600k tax, charities fraud - while one received a benefit

Source: 1News

Two brothers from Hamilton have been imprisoned after committing significant tax and charities fraud using shell companies over seven years.

 A file image of a judge's gavel.

Lindsay Scott, 61, and his brother Roger, 64, were sentenced in the Hamilton District Court this week after they, along with their sister Jillian, carried out a complex scheme to obtain fraudulent refunds from Inland Revenue over a seven-year period, Inland Revenue said in a statement.

The Scotts collectively claimed GST and charitable refunds totalling $594,821 through the scheme.

Lindsay Scott was sentenced to three years and six months in prison, while Roger Scott was sentenced to two years and six months imprisonment.

Their sister, a former chartered accountant, was sentenced to community detention and community work in April. An associate, Martin Pim, was sentenced last April for operating a 'trust' and signing fraudulent donation receipts.

The Scotts incorporated eight fraudulent companies and 10 supposedly charitable, non-profit entities as part of their scheme, after which the companies were registered for GST "on the basis of property developments, claimed GST refunds on property purchases and fictitious expenses, which then provided a basis for claimed losses to be offset against their incomes", Inland Revenue spokesperson Richard Philp said.

"Some of the properties were never even purchased, and the 'property development' amounted to no more than wall papering, while they and family members lived in the properties."

Mr Philps said the Scotts also used the companies and charitable entities to "circulate funds through a 'merry-go-round' of transactions to give the appearance of genuine charitable donations". The family then falsely claimed charitable donation rebates by providing each other with receipts and thank you letters, he said.

"The shell entities were, in fact, created with the sole intention of extracting fraudulent GST refunds and donation rebates."

Lindsay Scott was sentenced after earning more than half a million dollars of undeclared income, from which he evaded the assessment and payment of $103,785 of income tax over a 10-year period. He also fraudulently claimed $4652 of Working for Families tax credit while receiving a benefit.

During sentencing, the judge recognised the aggravating factors in the brothers' case, particularly their abuse of the charities regime.

"Both brothers were entirely unremorseful. They didn’t accept blame for what they did or take responsibility for what they’d done. They tried to paint themselves as victims because IRD had allowed them to make the claims.

"People who rip-off the tax system are stealing from ordinary New Zealanders. Inland Revenue staff put a lot of time and effort into this successful prosecution because we believe it's important to protect the integrity of the tax system and to make sure there’s a level playing field for all taxpayers."