Group accused of dodging $800k tax

Andrew Karl (left), Carol Karl, Thomas Brown and Timothy Meredith are charged with failing to pay just over an estimated $800,000 in income tax and GST. Photo / Duncan Brown

Five self-employed Northlanders earned their income under an unregistered Maori group and avoided paying tax of $800,000, a jury has heard.

The trial of Timothy Meredith, 46, Carol Karl, 51, Andrew Karl, 43, and Thomas Brown, 57, began before a jury of eight women and four men in the Whangarei District Court yesterday on charges of failing to pay income tax and GST. The total amount involved is estimated to be just over $800,000.

A fifth person, Timothy Craig, 37, failed to appear and a warrant is out for his arrest.

Carol Karl is facing one charge of evading assessment or payment of income tax, one of evading assessment or payment of GST, and another of evading payment of tax. The alleged offences occurred between April 2006 and April 2015.

Andrew Karl is facing similar charges and he allegedly offended between April 2010 and April 2015.

Brown is also facing the same charges and the alleged offences happened between April 2010 and November 2013.

Meredith is facing one charge of evading assessment or payment of income tax, one of evading assessment or payment of GST, and nine charges of evading payment of tax. His alleged offending covers the period between April 2007 and November 2013.

In his opening address to the jury, Crown solicitor Mike Smith said it was not a case of horrible or accidental mistake on the part of the five people but that they deliberately avoided paying tax when required to do so by law. He said all were professionals who claimed in their CVs to be experts in accounting and IT matters yet did not fulfil their obligations under the relevant taxation laws.

All five traded under the name Nga Uri o Tupoto which, according to the Inland Revenue Department, received just over $3.6 million in its bank account during the period they allegedly did not pay their taxes.

IRD investigator Ian McLisky was the first Crown witness and told the court the defendants did not pay 1c in tax.

He explained the obligations of different category of taxpayers and said since the five were classified as self-employed and charged GST using tax invoices, they were obliged to file income tax returns.

Mr McLisky became involved in the investigation after he obtained the bank statement of Nga Uri o Tupoto Incorporated Society and asked the bank to provide more information.

His check with the Maori Land Court and other government departments revealed the society was not registered.

Earlier, Meredith told the jury in his opening remarks the society was one of many Maori organisations and while they may not be registered, it did not mean they were not operating.

He questioned why the IRD did not contact or file charges against the society and why their trial was not held in Kaikohe where they and their hapu lived.

Andrew Karl mentioned the declaration of independence and the Treaty of Waitangi and said they simply followed the rules and regulations of the society.

"IRD made no attempts to discuss the matter with the incorporated society but rather singled out its beneficiaries and that's why we're here," he said.

The other two defendants did not wish to make opening statements.

At the end of the opening addresses, Judge Keith de Ridder told the jury matters such as Treaty claims and the venue of court proceedings raised by Meredith and Andrew Karl were not relevant to the trial.

The five in their earlier court appearances challenged the District Court's jurisdiction to hear their case and claimed they have been acquitted of wrongdoing by the Ngai Tupoto Native Council in Hokianga.

The council's mana, they claimed, superseded that of a court of law.