18 Nov 2015

Man sentenced on 79 tax fraud charges

6:28 pm on 18 November 2015

A Wellington businessman found guilty of 79 charges of tax fraud has escaped a jail sentence.

Wellington District Court.

Photo: RNZ / Alexander Robertson

Paul Coffey, 52, was sentenced in the Wellington District Court this afternoon and ordered to serve eight months home detention and to do 280 hours of community work.

The charges related to Coffey's failure to make PAYE and GST payments to the Inland Revenue Department (IRD) relating to businesses he was involved with.

Judge Bruce Davidson said the amount involved was about $600,000.

IRD lawyer Leo Stothart said there were several aggravating features to Coffey's offending, including its pre-meditated nature and the amount involved.

Each time the tax fell due, Coffey knowingly applied the money to other purposes and his actions harmed the integrity of the tax system.

Mr Stothart said the Court of Appeal, in an earlier judgment, had referred to such offending as "straightforward theft from the community".

He suggested a sentencing starting point of between three-and-a-half or four years' jail, saying the issue wasn't about Coffey having a lavish lifestyle and spending large sums on entertainment, but rather the fact he paid for that lifestyle by not paying tax.

Coffey's lawyer Mike Lennard said his client had worked hard to build up his companies, but he wasn't a good administrator and the charges arose because no one took responsibility for handling the companies' tax problems.

There was no deception involved and Coffey had been optimistic that his companies would be able to trade back to a position where the tax arrears could be caught up with and the current taxes paid on time, Mr Lennard said.

By early 2011, the companies' costs had been cut considerably and if their proposed sale had gone ahead the tax debts would have been met in full but that didn't happen.

Mr Lennard said Coffey had not personally benefited from the offending.

"He went from being spectacularly financially well-off in 2007 and 2008, after selling a share of his companies for $700,000, to someone who is insolvent."

Coffey's offending had wiped out 25 years of hard work and left him with a massive financial burden, which had impacted on his health.

Remorse recognised

Judge Bruce Davidson said there were several aggravating features to the offending, including its premeditated nature: "You knew month by month you were not meeting your obligations, but you did nothing about it."

The amount involved was significant, and Coffey did personally benefit because the money helped him maintain a fairly generous lifestyle, he said.

However, the judge said references showed Coffey was trusted, well-regarded and seen as reliable by other business people.

If Coffey had "taken the problem by the scruff of the neck early in 2009, all of what happened later could have been avoided", he said.

Judge Davidson said while the offending deserved a sentence starting point of three-and-a-half years in prison, deductions needed to be made to recognise Coffey's lack of previous offending, remorse, good character and his willingness to make reparation payments.

He also ordered Coffey to pay $20,000 reparation at $100 a week, starting in February next year.