Police v Kesha [2017] NZDC 25018 (3 November 2017)

Last Updated: 20 July 2018

IN THE DISTRICT COURT AT CHRISTCHURCH

CRI-2017-009-005637

[2017] NZDC 25018

NEW ZEALAND POLICE

Prosecutor v

RAYMOND MARTIN KESHA Defendant

Hearing:	3 November 2017
Appearances:	E Sparks for the Prosecutor M Smyth for the Defendant
Judgment:	3 November 2017

NOTES OF JUDGE A A COUCH ON SENTENCING

[1] Mr Kesha, you appear for sentence today on five charges under the Tax Administration Act 1994.

[2] In 2008 a company called “Be Smart Accounting” was incorporated. You were a joint director of that company. The company provided accounting and taxation services to individuals and small businesses. The company became registered as an employer on 6 June 2008. In November 2011 you became sole director and shareholder of the company.

[3] In June 2011, a second company called “Be Smart Group” was incorporated. You were the sole director and shareholder of that company. That company also offered accounting and taxation services, but had a second part of the business

NEW ZEALAND POLICE v RAYMOND MARTIN KESHA [2017] NZDC 25018 [3 November 2017]

operating a café. The first part of that company’s operation was registered as an employer in late 2012, the second part in 2013.

[4] On 12 March 2015, both companies were placed into liquidation by the High Court. At that time, Be Smart Accounting owed the Commissioner $280,860.72, being arrears of money and penalties. The Be Smart Group owed $349,037.81. In that case also, that was for all tax types and penalties.

[5] These debts were the result of numerous failures by each company to account to the Commissioner for PAYE deductions for employees’ wages, KiwiSaver employee deductions from employees’ wages, KiwiSaver employer contributions, student loan deductions and superannuation cash contributions.

[6] These defaults were in relation to 41 tax periods for Be Smart Accounting, 34 for the first part of the operations of Be Smart Group, and 19 tax periods for the Be Smart Group’s café business.

[7] Putting the penalties to one side, the total amount of deductions unaccounted for was $230,946.15. This was reduced by late payments of just under $35,000, leaving a net amount outstanding of $195,891.36. At all times, you were involved in the decision making and financial affairs for both companies.

[8] This has led to five representative charges of aiding and abetting those companies in using money properly payable to the Commissioner for other purposes. These are serious offences, each carrying a maximum penalty of five years’ imprisonment.

[9] I regard the gravity of your offending as serious. There was default on 94 payments totalling nearly $200,000 over a period of more than four years. Inland Revenue investigations show that, on many occasions, these companies had sufficient money available to pay the sums owed to the Commissioner. The implication of this is that you diverted payment to other uses deliberately.

[10] Given that the companies were in the business of providing accounting and taxation services, you were well aware of the company’s tax obligations and their financial positions. This was deliberate and calculated offending.

[11] In February 2014, you were given a warning by an Inland Revenue officer about the consequences of failing to remit PAYE deductions, but you continued to direct these companies to default for a further nine months.

[12] An important factor in assessing the gravity of your offending is that it involved serious breaches of trust. Money deducted from employees’ wages is held in trust for payment to the Commissioner. That money is not the property of the employer, and it is not open for the employer to deal with it in any way other than by remission to the Commissioner. The numerous failures to pay that money to the Commissioner were, therefore, breaches of trust owed both to the Crown and to the employees. The failure to make payment of employer KiwiSaver contributions has also resulted in a loss to the employees.

[13] A further factor is that you are an undischarged bankrupt so that there is no realistic prospect of reparation of any amount.

[14] The cases referred to in the submissions of counsel are of considerable assistance in deciding an appropriate starting point, but each case must be dealt with on its own facts. In the particular circumstances of this case I take a starting point of two years and six months’ imprisonment.

[15] There is one significant aggravating feature, and that is premeditation. In making repeated defaults on a regular basis over an extended period of time, you were clearly following a predetermined course of conduct. As I noted earlier, the companies had sufficient funds to make the required payments on many occasions so that your decisions to divert those funds to other purposes were clearly premeditated. For that I apply an uplift of four months.

[16] Turning to mitigating factors, you have no previous convictions which suggests that you may otherwise be of good character. That is confirmed by the references

which I have seen. Where there is sustained offending of this nature, however, over an extended period of time, I can give limited weight to that.

[17] The most significant factor is that you have entered prompt guilty pleas. On account of all the mitigating factors I would reduce the sentence by nine months.

[18] That leads me to a sentence of two years and one month imprisonment which is the sentence I impose on these charges – it is concurrent on the five charges.

A A Couch

District Court Judge