The 46-year-old was employed with IRD's call centre for 12 months before going on parental leave in August 2002.
Her role included answering income tax, student loan and family tax queries as well as modifying and confirming income statements and personal tax summaries.
In 2008, Isherwood and her partner set up Mana Scaffolding Ltd. Income tax returns were filed for the tax years 2009 and 2010 totalling just over $36,000.
The company was eventually struck off by the Companies Register in July 2011.
However, in 2015, one of Isherwood's employees applied to IRD about working for families tax credits. When the department looked into their employment history, it discovered the employee didn't have any.
The department then began digging and found it had been contracting itself to another scaffolding company between 2011 and 2016.
Mana had been issuing regular tax invoices to the other company, however no GST was charged and no GST returns was filed or returned.
Daily timesheets of the employee's hours were recorded but only used to prepare their invoices.
The department first picked up on irregularities in 2015 and sent round a compliance officer to talk about invalid GST tax invoices, advise that the company had been struck off in 2011, and to ask whether Mana had any employees.
Isherwood told the officer she was unaware the company had been struck off and that it hadn't been operating between 2011 and 2013.
Despite the visit, Isherwood continued to operate Mana for another 10 months, issuing invoices and failing to declare or account for GST, PAYE or income tax.
When interviewed in April 2016, Isherwood made a frank confession, stating that she was in full control of the company's financial information including invoicing and was aware she was required to file GST returns every two months.
She even admitted to using the department's online PAYE calculator to deduct PAYE and was also able to name the form - IR348 - used to file monthly employee schedules required for Mana each month.
She stated that any tax owed on the employees' behalf was her problem because she was taxing them and not passing it on.
She also admitted to having a gambling addiction and instead of paying tax she gambled large sums of money at the casino.
After the interview, officers visited her Fairfield house and discovered they no longer lived there, with just a few personal items remaining.
The department's investigation also discovered Isherwood had received $37,217.80 of working for families tax credits she wasn't entitled to.
As Isherwood failed to pay her employees' PAYE, none of her employees were able to apply for or receive additional support or working for families tax credits that they were legally entitled to.
Isherwood was convicted by Judge Kim Saunders and remanded on further bail for sentencing in October.
Despite the IRD's investigation, Mana Scaffolding Ltd was resurrected in the companies office in June this year. It's unclear if the company is still operating.
When contacted, Isherwood's lawyer Rob Weir said he had not been instructed by his client to make any comment about her case.
Tax evasion breakdown:
• Income tax: $179,130.34
• Working for families tax credits: $37,217.80
• Mana's GST: $217,656.34
• Mana's PAYE deductions: $169,729.21
Total unpaid: $603,733.69
