Tax Prosecutions

35. How does a tax prosecution start?

Normally the IRD will file charging documents against a person in the District Court. In these the Commissioner of Inland Revenue acts as prosecutor and will state the basis on which it is considered that an offence has been committed. The charging documents will be served personally on the defendant and will include a summary of facts and information about how the defendant should respond. The charging document will state a date and time for the defendant’s first appearance.

36. What happens at the first appearance

Most first appearances on tax charges occur before a registrar in the District Court. Depending on the number and seriousness of the charges it is usually possible to reach agreement with the IRD about the terms on which a defendant will be remanded and bailed at the first appearance. In some cases the remand will be at large and the defendant will simply be ordered to return to the Court at a later time. In other cases bail may be imposed with or without additional terms. If bail is required it will be necessary for the defendant to complete a bail agreement before leaving Court at the first appearance.

37. What bail conditions are possible?

If bail is sought by the IRD it may also ask for certain conditions. This is particularly so if more serious charges have been laid. Some of the most common conditions are to reside at a nominated address, to surrender your passport and to report periodically to Police. If you do not want these to apply but the IRD does, the matter will have to be dealt with by a Judge rather than the registrar.

38. If remanded, do you have to keep coming back to the Court?

Yes. It is sometimes possible to deal with matters on the basis that your counsel appears without you, but some Judges can get upset about that. It is wise that at the end of each remand you front up at the Court for matters to be rolled over.

39. When do I enter a plea?

You should enter a plea at the time when you have enough information to be able to assess properly what the nature of the charges is and a good idea of the factual allegations on which the IRD relies. In most cases, if initial disclosure has been given by the prosecutor, the Court will expect that a person be in a position to enter a plea at their second appearance. Sometimes you may not have all of the information you feel you need but the Court may insist that a plea be entered. If you have the slightest doubt about what you should do, enter a plea of not guilty, which you can later change if necessary. If you are going to plead guilty, there is a sentencing benefit in your having pleaded guilty at the earliest possible opportunity.

40. Can I change my plea?

If you plead not guilty you are able to change your plea to guilty at any time, even after the trial has started. If you have pleaded guilty you can only change your plea to not guilty in very limited circumstance and with the leave of the Court.

41. Should I elect a jury trial or Judge alone?

The right to make this election is not available in all prosecutions but, if it is, you will generally be expected to make the election at the time you enter a plea. More serious tax evasion charges carry the right to elect a jury trial. If you are able to elect, you should discuss this carefully with your lawyer because it will have a very important effect on the way your trial proceeds. In a jury trial it is the jury which decides the facts of the case. If the trial is before a Judge alone, that Judge decides matters of fact and law. There are no hard and fast rules about the choice. Some juries are hard on defendants who evade taxes – taking the view that “if I pay mine you should pay yours”. Others can be persuaded that a defendant did not behave deliberately or dishonestly if they think the IRD has been heavy-handed.

42. Can I get some idea of sentencing if I plead guilty?

Yes, it is possible to get a sentencing indication from a Judge based on the prosecution summary of facts. If you accept a sentencing indication it is highly likely that a sentence as indicated will be imposed unless at the time of sentencing there are other factors that the Court was unaware of at the time of its indication. The sentencing indication is not binding on the Court and you may end up being sentenced by another Judge altogether, but it will be a fairly clear indication from the sitting Judge of the range within which he or she sees your sentence as likely to fall.

43. What are the maximum sentences for charges of tax evasion?

The words “tax evasion” actually cover a number of possible offences under the Tax Administration Act and the Crimes Act. If the offences are charged under the TAA, the maximum sentence for the most serious offences is 5 years imprisonment and/or a fine of $50,000. If the offences are charged under the Crimes Act the maximum possible term of imprisonment rises in most cases to 7 years.

44. Does it help to have paid back the tax?

It helps a great deal. When imposing sentence the Court is required to take into account any efforts by the defendant to make restitution or amends. Where the IRD and the general population of taxpayers are concerned, that means paying the tax that was evaded. It also helps if use of money interest has been paid. The Courts give sentencing credits for various matters and this is one of them, although you must accept that there is also the view that by paying back the tax you are simply doing what ought to have been done in the first place.

45. Can I get legal aid for a tax prosecution?

If you meet the criteria for legal aid it can be available for the defence of tax charges. However, Geoff Clews does not accept legal aid briefs.