Jail for construction boss who paid his creditors with employees' tax deductions

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A Christchurch construction boss has been sentenced to 14 months in prison for tax evasion.

John Clancy, director of Hanguk Business Investments, misappropriated nearly $370,000 in tax deductions from his employees' wages.

According to Inland Revenue, Clancy failed to pass on most deductions made from workers' wages including PAYE tax, KiwiSaver contributions and student loan repayments. The offending occurred over a 12 month period from August 2014 to July 2015.

David Udy, IRD group manager of 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," Udy said.

"Mr Clancy chose to keep his businesses afloat by paying trade creditors with the tax he deducted from his workers' wages.

"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."

Hanguk was put into liquidation in 2015 by IRD.

Over the past two years, Clancy had been the director of seven companies placed into liquidation - owing a total of $2.2m to IRD.

"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," Udy said.