IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CRI-2024-404-411
[2024] NZHC 3467	

BETWEEN	REHANA ALI (AKA) REHANA SHAH
Appellant	
AND	COMMISSIONER OF INLAND REVENUE
Respondent	

	CRI-2024-404-419	

BETWEEN	
MOHAMMED NASEEB
Appellant	
AND	COMMISSIONER OF INLAND REVENUE
Respondent	

Hearing:	15 October 2024	
Appearances:	M W Büdler and S J Morgan for appellant Ali (aka) Shah D P Weaver for appellant Naseeb
C P Howard and P J Broczek for respondent	
Date of judgment:	20 November 2024	

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 20 November 2024 at 12.30pm.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
D P Weaver, Barrister, Tauranga Public Defence Service, Manukau Kayes Fletcher Walker, Manukau
Inland Revenue Department – Legal Services (Manukau)

ALI (AKA) SHAH v COMMISSIONER OF INLAND REVENUE [2024] NZHC 3467 [20 November 2024]

[1]	Rehana Shah (as she prefers to be known) and Mohammed Naseeb appeal the 29 February 2024 decision of Judge G A Andrée Wiltens in the District Court at Manukau,1 finding them each guilty of offences against the Tax Administration Act 1994 (the Act).2 They also appeal the Judge’s three-year imprisonment sentences.3

Background

[2]	Mr Naseeb and Ms Shah operated  a  construction  business  through Supreme Constructions Civil & Drainage Works Company Limited (Supreme), incorporated in June 2012, of which Mr Naseeb was sole director and shareholder. Ms Shah assisted with the administrative aspects of the business, including liaison with their common tax agent, Arif Mohammed.

[3]	The Commissioner of Inland Revenue (the  Commissioner)  charged  each Ms Shah and Mr Naseeb with aiding and abetting Supreme on various dates from March 2013 to January 2016 to apply its employees’ PAYE tax deductions to other than their payment to the Commissioner (x 31). Ms Shah also was charged with evading or attempting to evade assessment of GST payable by Mr Naseeb (x 10, on various dates between October 2010 and May 2015) and by Supreme (x 14, on various dates between August 2012 and April 2016), and of income tax payable personally (x 11, on various dates between May 2010 and July 2015) and by Supreme (x 3, on various dates between June 2013 and April 2016).

[4]	As against returns filed in respect of some of the relevant periods for each  Mr Naseeb, Ms Shah and Supreme contending for little or no assessable income, for trial, the Commissioner led evidence asserting they each had substantial assessable income, with consequent unpaid tax liabilities. For Mr Naseeb and Supreme, such income also was derived from supply as rendered them registration for GST, again with consequent unpaid tax liabilities. And Supreme failed to apply the whole of its PAYE deductions from employees’ remuneration in payment to the Commissioner.

1	Commissioner of Inland Revenue v Naseeb & Ali DC Manukau CRI-2017-092-2141/2153, 29 February 2024.
2	GST evasion (x 24) and income tax evasion (x 14) (Tax Administration Act 1994, s 143B(2): maximum penalty, five years’ imprisonment and/or $50,000 fine); aiding and abetting a company to withhold PAYE tax (x 31) (ss 143A(1)(d) and 148: maximum penalty, five years’ imprisonment and/or $50,000 fine).
3	Commissioner of Inland Revenue v Ali & Naseeb [2024] NZDC 16759.

Convictions appeal

Judgment under appeal

[5]	After summarising the relevant law,4 the Judge outlined the factual timeline to illustrate Mr Naseeb’s and Ms Shah’s long-term and informed but only intermittent engagement with the Inland Revenue Department (the IRD).5 The Judge then summarised  the  prosecution   evidence   given   by   two   IRD   employees, Bernard Fernandes and Hayley Williams, and Mr Mohammed.6 Mr Fernandes calculated the quantum of income tax and GST liability of each Mr Naseeb, Ms Shah and  Supreme  at   respectively   $368,311.01,7   $164,902.608   and   $356,033.61;9  Ms Williams calculated Supreme’s PAYE liability at $101,235.59.10, The Judge generally accepted the IRD employees’ evidence.11

[6]	The Judge did not accept Mr Mohammed’s explanations of inaccuracies in his income tax and GST returns,12 finding “his work, at best, might be described as sloppy”,13 but reliant in any event on Mr Naseeb’s and Ms Shah’s unmet obligations to provide all relevant information to him.14 The IRD’s evidence included its interviews of each Mr Naseeb and Ms Shah. The Judge doubted both Mr Naseeb’s lack of tax knowledge in reliance instead on Ms Shah and Mr  Mohammed,15  and  Ms Shah’s  lack  of  tax  knowledge   in   reliance   instead   on   Mr   Naseeb   and Mr Mohammed.16

[7]	Mr Naseeb and Ms Shah called evidence  from  an  accountancy  expert, Jason Weir, to dispute any shortfall in their and Supreme’s income tax and GST returns

4	Commissioner of Inland Revenue v Naseeb & Shah, above n 1, at [6]–[19].
5	At [27].
6	At [28]–[92].
7	At [32] (subject to the Judge’s rejection of a 20 per cent allowance for gross income; see [7] below) and [34].
8	At [43].
9	At [37] (subject to the Judge’s rejection of a 20 per cent allowance for gross income; see [7] below) and [40].
10	At [63].
11	At [59] and [73].
12	At [82].
13	At [129].
14	At [130].
15	At [86].
16	At [92].

on the basis of assumptions he made, including by applying “average profit levels” to Supreme’s income.17 The Judge acknowledged assumptions were unavoidable given the absence of adequate records, but generally preferred the IRD’s approach where that diverged from Mr Weir’s.18 The exception was Mr Fernandes’ assumption of Supreme’s expenses at 20 per cent of gross income,19 which the Judge considered unjustified.20

[8]	The Judge found — prior to Supreme’s incorporation, when Mr Naseeb had undertaken supply in his own capacity — he had not met his GST liabilities to register for GST, file GST returns and pay GST to the Commissioner at regular intervals.21 The Judge accepted the IRD’s calculation of the quantum of unpaid income tax and GST to support a finding of evasive behaviour.22 The Judge considered there was ample evidence PAYE deductions had been withheld from the Commissioner.23

[9]	The Judge found Mr Naseeb’s and Ms Shah’s dissembling supported inferences of their evasive intentions.24 Their failure to provide Mr Mohammed with comprehensive documentation was “deliberate and done to evade tax”.25 Their interchangeable operation of their own and Supreme’s  bank accounts, in support of  a “standard of living … wholly inconsistent with the returns filed”, illustrated their knowledge “Supreme was earning much more than was reported to the IRD”.26 They ceased any compliance with their tax obligations on commencement of the IRD’s investigation and deliberately took no steps to correct their earlier inadequate disclosure.27

[10]	The Judge found the overall shortfall of tax evidenced by the IRD as $750,000, “the culpability for which is [ascribed] equally to Mr Naseeb and Ms [Shah]”.28

17	At [94] and [98].
18	At [97] and [105].
19	At [33].
20	At [133].
21	At [107].
22	At [108].
23	At [110]–[111] and [123]–[124].
24	At [113]–[122] and [125]–[126].
25	At [130].
26	At [131].
27	At [132].
28	At [133].

[11]	The Judge summarised the elements of evading or attempting to evade income tax or GST offending:29

(i)	There was liability for assessment or payment of a tax for themselves or another person which was not met;

(ii)	The defendant knew of that liability; and

(iii)	The defendant evaded or attempted to evade the assessment or payment of that tax for themselves or the other person.

[12]	In respect of those charges, the Judge found:

(a)	Mr Naseeb was liable to file income tax returns for each the 2012–2016 tax years. That was known to him and Ms Shah. He filed nil assessable income returns for the 2012 and 2013 tax years, declared $1,576 of assessable income for the 2014 tax year and filed no return for the 2015 and 2016 tax years. The filings did not reflect his true assessable income. The filings and failures to file were “clearly evasive”,30 as was Mr Naseeb’s and Ms Shah’s “deliberate and intentional” withholding of information from Mr Mohammed for his filing of Mr Naseeb’s returns.31 Mr Naseeb and Ms Shah accordingly each were guilty of these five charges;32
(b)	Ms Shah was liable to file income tax returns for each the 2011–2016 tax years. That was known to her and Mr Naseeb. She declared $2,560 of assessable income for the 2011 tax year and $1,000 for the 2012  tax year, filed nil assessable income returns for the 2013  and 2014  tax years and no return for the 2015 and 2016 tax years. The filings did not reflect her true assessable income. The filings and failures to file were “clearly … evasive”, as was Ms Shah’s and Mr Naseeb’s “deliberate and evasive” withholding of information from

29 At [12]–[13], in reliance on Taylor v Attorney-General [1963] NZLR 261 (SC); R v Rowley [2012] NZHC 1778; District Commissioner of Inland Revenue v Gordon (1989) 11 NZTC 6,082 (HC); Gilchrist v R [2006] NZSC 109, [2007] 1 NZLR 499; and R v G [2013] NZCA 146.
30	At [135]–[137].
31	At [138].
32	At [139].

Mr Mohammed for his filing of her returns.33 Mr Naseeb and Ms Shah accordingly each were guilty of these six charges;34

(c)	Supreme declared nil assessable income returns for the 2013 and 2014 tax years and a $62,850 loss for the 2016 tax year. The filings clearly understated its true assessable income, as Mr Naseeb and Ms Shah were “fully aware … and took steps to ensure” by their “deliberately evasive”  withholding  of   information   from   Mr   Mohammed.35   Mr Naseeb and Ms Shah accordingly each were guilty of these three charges;36
(d)	each of Supreme’s GST returns for the two-monthly periods ending 31 July 2012 to 31 March 2015 were filed late and understated the true GST components of Supreme’s assessable income by Mr Naseeb’s and Ms Shah’s  deliberate  withholding  of  relevant  information  from  Mr Mohammed, “done with the intention of evading tax”.37 Mr Naseeb and Ms Shah accordingly each were guilty of these 14 charges;38 and
(e)	Mr Naseeb’s and Ms Shah’s prior personal registration for GST, and Mr Naseeb’s request in March 2012 his registration cease “as he was then ‘… in business in the  company,  now’”,  taken  together  with Ms Shah’s level of involvement “in the running of the Supreme operation”, established their respective awareness of his lack of any personal GST returns or payment as “deliberate and accordingly amount to the evasion of  a  tax  liability”.39  The  Judge  convicted  Mr Naseeb and Ms Shah of these 10 charges.40

[13]	Turning to PAYE deductions, the Judge also identified the four elements of such offending:41

33	At [141]–[143].
34	At [144].
35	At [146]–[147].
36	At [148].
37	At [150]–[151].
38	At [152].
39	At [154]–[156].
40	At [157].
41	At [18]–[19], relying on Pongi v R [2012] NZCA 127 and R v Easton [2013] NZHC 478.

(i)	Tax deductions or withholdings were made; and

(ii)	The deductions or withholdings were applied for a purpose other than in payment to the Commissioner; and

(iii)	The person knew this; and

(iv)	The defendant aided and abetted the person to commit the principal offence under the Tax Administration Act.

[14]	The Judge was satisfied deductions or withholdings were made from Supreme employees’ remuneration and retained by Supreme for general purposes without payment to the Commissioner. Again, Mr Naseeb and Ms Shah:

… knew this and took steps to ensure that was the case by not providing the IRD with all relevant information and by not arranging for payment of the withheld funds.

Such “was deliberately evasive and amount[ed] to aiding and abetting”.42 Mr Naseeb and Ms Shah accordingly each were guilty of these 31 charges.43

[15]	On appeal, with reliance on Pongi v R,44 both Mr Naseeb and Ms Shah argue the Judge erred in failing to establish as proved deductions were made from employees’ gross wages. Otherwise, for Ms Shah, Matthew Büdler argues the Judge erred both in applying the law on tax evasion and in failing to assess Ms Shah’s knowledge and  intent  separately  from  that  of  Mr  Naseeb,  such  to  give  rise  to a miscarriage of justice.

Approach on appeal

[16]	Appeals against conviction are determined by way of rehearing.45 As against a decision reached on a judge-alone trial, I must allow the appeal only if satisfied the Judge erred in his assessment of the evidence to such an extent a miscarriage of justice has occurred, or a miscarriage of justice has occurred for any reason.46 Under the former head, a miscarriage will have occurred if the verdict is not supportable on the

42         At [159].
43         At [160].
44 Pongi v R, above n 41.
45 See Sena v Police [2019] NZSC 55, [2019] 1 NZLR 575 at [32], where the Court noted that the principles in Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 apply.
46 Criminal Procedure Act 2011, s 232(2).

evidence; the latter head is concerned with miscarriages “beyond the sufficiency of the evidence”.47

[17]	By “miscarriage of justice” is meant something has gone wrong at trial, either to create a real risk the outcome of trial was affected or to result in the trial itself being unfair or a nullity.48 The magnitude of the former error is to be of “sufficient seriousness to warrant the verdict being set aside without further inquiry”.49

[18]	In Walker v R, the Court of Appeal explained of s 232(4)’s definition of “miscarriage of justice”:50

A miscarriage in the former of those senses was held under the law as it previously was to involve two issues, and that continues to be so:

First, something must have gone wrong with the trial or in some other relevant way. Secondly, what has gone wrong must have led to a real risk of an unsafe verdict. That real risk arises if there is a reasonable possibility that a not guilty (or a more favourable) verdict might have been delivered if nothing had gone wrong.

A miscarriage in the second sense, one which has “resulted in an unfair trial”, must be set against s 25(a) of the New Zealand Bill of Rights Act 1990, which confers an absolute right to “a fair and public hearing by an independent and impartial court”.

The ‘real risk’ standard is “whether there is a reasonable possibility that a different verdict would have been delivered”, absent the error, irregularity or occurrence.51

[19]	As to the trial judge’s assessment, the Judge’s reasons are to:52

… show an engagement with the case, identify the critical issues in the case, explain how and why those issues are resolved, and generally provide a rational and considered basis for the conclusion reached.

47  Wiley v R [2016] NZCA 28, [2016] 3 NZLR 1 at [25], citing Baini v R (2012) 246 CLR 469 at  [27].
48 Criminal Procedure Act, s 232(4).
49 Wiley v R, above n 47, at [41], adopted by the Supreme Court in Haunui v R [2020] NZSC 153, [2021] 1 NZLR 189 at [50].
50        Walker  v R [2016] NZCA 152 at [15]–[16], citing R v Sungsuwan [2005] NZSC 57, [2006]         1 NZLR 730 at [110] as to a miscarriage of justice for the purposes of s 385(1)(c) of the    Crimes Act 1961; Wiley v R, above n 47, at [27]; and Hansen v R [2007] NZSC 7, [2007] 3 NZLR 1 at [65]. Similarly, Do v R [2024] NZCA 97 at [18] and Sachu v R [2023] NZCA 610 at [28], both also citing R v Sungsuwan, above, at [110].
51 Misa v R [2019] NZSC 134, [2020] 1 NZLR 85 at [46] (original emphasis).
52 Sena v Police, above n 45, at [36].

But, on appeal from a judge-alone trial, my consideration of any contended error in the Judge’s assessment of the evidence is not to retry the case on the facts. It is not enough I may disagree with his factual assessment: “[s]omething more is required to meet the ‘real risk’ test”.53 Rather, I am to consider if the Judge’s assessment is so unreasonable  or  unsupportable  having   regard   to  the  evidence   it  amounts  to   a miscarriage of justice;54 if, having regard to all the evidence, the Judge “could not reasonably have been satisfied to the required standard that the accused was guilty”.55

The relevant law

—on evasion

[20]	Section 143B(2) of the Act provides:

143B	Evasion or similar offence

…

(2)    A person who evades or attempts to evade the assessment or payment of tax by the person or another person under a tax law commits an offence against this Act.

[21]	The leading authority is the Court of Appeal’s decision in R v G,56 which specified the elements of the “catch-all” offence as being:57

(a)	any act or omission with the effect of evading the payment of tax by the person responsible for the act or omission or by another taxpayer (the physical element);58 and
(b)	the defendant had knowledge of the tax obligation and intended to evade its payment (the mental element).59

53	Gotty v R [2017] NZCA 528 at [15].
54	Jeffries v R [2013] NZCA 188 at [93]; similarly, Wiley v R, above n 47, at [10(d)] and R v Slavich
[2009] NZCA 188 at [33].
55	Owen v R [2007] NZSC 102, [2008] 2 NZLR 37 at [17].
56	R v G, above n 29.
57	At [21].
58 At [58]. The Court found evasion also encompassed obstructing or preventing the payment of tax and delaying or impeding the payment of tax. In this case, the Court considered late filing of returns could be the actus reus of a charge of evasion: at [67].
59 At [59].

The Court of Appeal  observed,  as  actual  (or  attempted)  evasion  was  required,  “s 143B(2) may be described as a result crime, not a conduct crime”, achievable by omission.60 The  Court  was  informed  by  the  interpretation  of  “evasion”  in Taylor v Attorney-General:61

In my view the word “evade” associated with the expressions “attempts to evade” or “does any act with intent to evade” includes an element of intent, an intention to endeavour to avoid payment of tax known to be chargeable. This also seems to be in conformity with the view of Knox C.J. in the same case, when he says: “The distinction in meaning between the words ‘evade’ and ‘avoid’ is well established, and a charge of evading payment is not made out by evidence which proves no more than that the person charged failed or omitted to pay an amount payable by him”.

—on misapplication of deductions

[22]	Section 143A of the Act provides:

143A	Knowledge offences
(1) A person commits an offence against this Act if the person—
…
(d)    knowingly applies or permits the application of the amount of a deduction or withholding of tax made or deemed made under a tax law for any purpose other than in payment to the Commissioner;
…
(4)	No person may be convicted of an offence under subsection (1)(d) for knowingly applying or permitting the application of an amount of withholding or deduction of tax for a purpose other than in payment to the Commissioner, if the person satisfies the court that the amount of the deduction or withholding has been accounted for, and that the person’s failure to account for it within the prescribed time was due to illness, accident, or other cause beyond the person’s control.
(5)	Without limiting any other provision of this Act, the term withholding or deduction of tax in subsection (4) includes—
(a)	a PAYE income payment:
…

[23]	The application of a deduction for another purpose is the subject of a deeming provision in s 4A(2), which relevantly provides:

60	At [22], [26] and [53].
61	Taylor v Attorney-General, above n 29, at 262, referring to Wilson v Chambers and Co Pty Ltd
(1926) 38 CLR 131.

(2)	For the purposes of this Act—
…
(b)	an amount of tax is deemed to be withheld when payment is made of the net amount of a PAYE income payment:
…
(c)	the amount withheld or deducted described in paragraph (b) or paragraph (bb) is deemed to have been applied for a purpose other than in payment to the Commissioner if the amount is not paid to the Commissioner by the relevant due date:
…

[24]	In R v Smith, the Court of Appeal summarised the key elements of the offence:62

Obviously the statutory purpose is to ensure that whenever there is a net payment of salary or wages the person paying those wages accounts to the Commissioner for the appropriate PAYE deduction by the relevant due date. Anyone who knowingly fails to account to the Commissioner commits an offence under s 143A(1)(d).

In Pongi v R, the Court of Appeal held s 143A(1)(d) does not apply unless a deduction of PAYE income payment has actually been made or it is deemed to have been made.63 Payments made to workers without any PAYE deductions at all were not to be treated as net payments sufficient to constitute an offence under the section.

[25]	For completeness, the Supreme Court has observed the Commissioner need not prove the precise amount of PAYE misappropriated to establish the elements of the offence.64

—on aiding or abetting

[26]	Mr Naseeb and Ms Shah were charged with aiding and abetting Supreme in misapplication of PAYE deductions under s 148 of the Act, which provides:

62 R v Smith [2008] NZCA 371 at [14].
63 Pongi v R, above n 41, at [24]. The Court rejected the position in R v Fepuleai [2008] NZCA 339, (2008) 23 NZTC 22,083 that all PAYE income payments made by an employer were treated as net payments whether or not they had PAYE actually or notionally deducted from them: at [15].
64 Smith v R [2008] NZSC 110, (2009) 24 NZTC 23,176 at [3], approving the Court of Appeal’s findings at [14]–[18] and declining leave to appeal.

A person who aids, abets, incites, or conspires with another person to commit an offence (the principal offence) against this Act also commits an offence against this Act.

R v Gill establishes the test is the person must at least know the essential matters which constitute the offence.65

Discussion

—evasion

[27]	For Ms Shah, Mr Büdler argues the facts did not establish Ms Shah “personally acted evasively or attempted to evade” in respect of the various tranches of charges relating respectively to her own, Mr Naseeb’s or Supreme’s income tax liabilities, or Mr Naseeb’s or Supreme’s PAYE or GST obligations.

[28]	While it was not disputed there were some such liabilities and obligations, and such returns as were filed were incorrect, Mr Büdler submits the Judge could not have been satisfied as to Ms Shah’s own requisite knowledge and intent, which the Judge impermissibly inferred from the overall evidence of Supreme’s “poorly run and chaotic business” as illustrated by the IRD’s audit and Mr Mohammed’s accounting practices. For example:

The bank account versus general ledger analysis showed significant sums of money narrated as “income” by Ms Shah, on instruction from Mr Naseeb, but were not  included  in  general  ledger/tax  returns  prepared  and  filed  by Mr Mohammed. There was also inconsistent treatment  of  transfers  from Mr Naseeb’s personal bank account and cash deposits — sometimes these transactions were included as income on other occasions not.

Similarly, Mr Büdler contends transfers of funds from Mr Naseeb’s bank account to Supreme’s bank account after payment of business expenses, for accounting as Supreme’s net income, illustrated there was no intention to evade tax obligations and there was no evidence Ms Shah was aware of Mr Naseeb’s practice (even although her own account was used similarly).

[29]	Mr Büdler submits the only available inference was of “a business marked by chaos and reliance on an unreliable accountant”. The evidence did not establish, as

65	R v Gill (1999) 19 NZTC 15,526 (CA) at [23].

was required for a finding of guilt on each charge, Ms Shah knew of Supreme’s obligation and intended its breach. He notes Mr Mohammed’s acceptance in evidence, over the single GST period of April–May 2014, “tens of thousands of dollars’ worth of income that Ms Shah had narrated as income had not been included in the GST or income tax returns of Supreme”. Mr Mohammed’s myriad failures could not be attributed to Ms Shah on any basis. The Judge could not have been sure she knew of them.

[30]	Mr Büdler points to the absence of any personal expenditure by Ms Shah disproportionate to modest shareholder drawings and notes the efforts Mr Naseeb, assisted by Ms Shah, made in 2015–2016 to comply with his and Supreme’s tax obligations. But he says Mr Mohammed’s evidence was she was entirely dependent on Mr Naseeb’s direction for treatment of  any  business income or  expenditure.  The Judge was wrong to infer that established Ms Shah was “fully involved with the operation of Supreme  and  well  immersed  in  the  dealings  of  the  company”;66  Mr Mohammed exercised his own discretion in coding transactions.

[31]	Similarly, in respect of Mr Naseeb’s personal GST liability, the Judge had no foundation for certainty she “was so involved in the running of the Supreme operation that she was aware of the level of Mr Naseeb’s assessable income from his taxable activity”.67 Mr Büdler contends Mr Fernandes  conceded  there  was  no  evidence Mr Naseeb conducted any taxable activity distinctly from Supreme. Neither was there evidence Mr Naseeb personally had conducted any taxable activity prior to Supreme’s incorporation; rather, he then was associated with Supreme Construction & Civil Works Limited of which his daughter was director, which may have conducted (and accounted for) any taxable supply.

[32]	However, in my view, the Judge clearly understood “any failure must be intentional to amount to evasion”.68 The Judge correctly directed himself that proof of requisite knowledge was available from logical inference,69 and deliberate

66	Commissioner of Inland Revenue v Naseeb & Ali, above n 1, at [75].
67	At [155].
68	At [13], relying on Taylor v Attorney-General , above n 29, and R v Rowley, above n 29.
69	At [13], relying on District Commissioner of Inland Revenue v Gordon, above n 29, at 6,084.

under-statement or lateness of filing are indicators of evasion,70 as may be failure to file a return.71 Moreover, the Judge recognised dishonesty was not any element of evasion;72 neither was the amount of tax evaded, if any.73 Instead, evasion is “conscious or knowing conduct … beyond simply overlooking making payments and so inadvertently failing to make … payments”;74 “knowing that the act or omission intended is wrong or acting deliberately or recklessly as to whether or not the act or omission is wrong”;75  thus, intentional avoidance of payment in  circumstances of    a known obligation to pay is an intent to evade.76 The Judge also explained he drew inferences against Mr Naseeb or Ms Shah “only where that was the only available logical inference”, and with any inference in their favour “given priority over all other available inferences”.77

[33]	From that perspective, the Judge identified Ms Shah’s directorship of and sole shareholding in other companies from 2007 and 2009, in respect of which IRD had contacted her in 2011 about some $180,000 PAYE arrears and warned her of the consequences of their disregard, at which time Mr Mohammed had filed her returns of assessable income $2,485 for 2010 and $1,000 for 2011. She also was a director of and shareholder in Supreme after its incorporation and on the same date as its registration for GST. From 31 July 2012 to 31 May 2015, Mr Mohammed belatedly filed Supreme’s two-monthly GST returns, “based  on  information  provided  by  Ms [Shah]”. On 6 June 2013, Mr Mohammed filed Ms Shah’s 2012 and 2013 returns, declaring no assessable income. (No returns were filed on her behalf for 2014 or 2015; default assessments issued instead. A 2016 return was filed. The IRD’s adjusted notice of her assessment was not challenged or paid.)

[34]	In September 2013, Ms Shah responded to the IRD to provide additional information in support of PAYE deductions. In October 2013, she identified herself to

70	At [13], relying on Gilchrist v R, above n 29, at [15] and [19].
71	At [13], relying on R v G, above n 29.
72	At [14], relying on Smith v R [2013] NZSC 184.
73	At [14], relying on Smith v R, above n 72.
74	R v Fepuleai, above n 63, at [18].
75	R v Rowley, above n 29, at [457], referring to Babbington v Commissioner of Inland Revenue (No 2) [1958] NZLR 152 (SC) at 156.
76	Abraham v Auckland District Court [2007] NZCA 598, [2008] 2 NZLR 352 at [39(b)], referring to Wilson v Chambers and Co Pty Ltd, above n 61, and Taylor v Attorney-General, above n 29.
77	Commissioner of Inland Revenue v Naseeb & Ali, above n 1, at [23].

the IRD as Supreme’s employee in charge of  payroll.  In  November  2013  and  July 2014, she advised the IRD of PAYE return errors she wished to correct. In March 2014, she enquired of the IRD as to Supreme’s tax debts. On occasions between March and May 2014, she liaised with the IRD on proposed but abandoned repayment of Supreme Electrical and Diesel Services Limited’s $319,000 tax arrears. In December 2014, the IRD sought Supreme’s overdue PAYE returns of Ms Shah, who advised they had been mailed but would be filed electronically. On following up inconsistencies in February 2015, Ms Shah provided six Supreme employees’ gross pay and deductions details over the telephone. In March 2015, she contacted the IRD, seeking to avoid late PAYE return penalties.

[35]	The IRD then raised inconsistencies in Supreme’s PAYE return with her, which she accepted as well as Supreme’s non-payment of deductions made. In June 2015, on the IRD’s enquiry, Ms Shah advised Supreme’s late PAYE and GST returns would be filed by the end  of  the  month  with  arrangements  to  get  payment  up  to  date.  On the IRD’s further enquiry, Ms Shah explained there were cashflow issues and the company’s director was ill. When the IRD indicated PAYE and GST payment should not affect cashflow, she said she would discuss that with Supreme’s director and revert; she later advised her husband was in hospital and returns would be filed after discussion with their accountant. On 13 August 2015, Mr Naseeb advised the IRD Ms Shah was an executive office holder for Supreme. In September 2015, the IRD made adjustments to Supreme’s PAYE return in consultation with Ms Shah. The IRD subsequently pursued Supreme’s unfiled GST returns with Ms Shah to no avail, she referring it to Mr Mohammed, who said he had not received the foundation documents from her. On the IRD’s further enquiry of her, she “would check”.

[36]	Also in February 2015, Mr Mohammed  advised  the  IRD  Ms  Shah  (and Mr Naseeb and Supreme) had instructed him to disclose previously undisclosed cash payments. The IRD’s audit followed, in which Mr Naseeb advised Mr Fernandes all Supreme’s documentation work was done by Ms Shah.

[37]	The Judge found all that evidence “to demonstrate … Ms [Shah]’s considerable exposure to, and hence [her] knowledge of, the New Zealand tax regime”.78 None of her personal bank accounts was provided to Mr Mohammed prior to commencement of the IRD’s investigation.79 The Judge found the records for five bank accounts held by her showing 2009–2015 transactions with both Mr Naseeb and Supreme should have been disclosed to Mr Mohammed.80 Mr Fernandes assessed Ms Shah liable for 2011–2016  income  tax  totalling   $164,902.60.81   The   Judge   did   not   accept  Mr Mohammed’s electronic filing of returns diluted Ms Shah’s individual responsibilities.82 The Judge noted she “was involved in the administrative side” of Supreme’s operation.83 He accepted Mr Fernandes’ identification of $291,300 assessable income to her for 2015 in  that  role as  credible in  a family  business.84 Ms Shah’s bank accounts had been used (as had those of Supreme and Mr Naseeb) to pay wages to Supreme employees.85 The Judge recorded there was no challenge to the IRD’s 2013–2016 contact with Ms Shah for Supreme, in which she was “‘educated’ as to the correct steps relating to PAYE”,86 and accepted that earlier also was in relation to the other company.87

[38]	It was Ms Shah’s contention in the IRD’s interview “she had no idea how the business of Supreme ran or operated, and that she was a simple housewife who helped with some of the paperwork”.88 But the Judge found Mr Mohammed’s unchallenged evidence he relied on Supreme’s bank account statements annotated by Ms Shah as to their income and expenditure components or followed up with her for her instruction demonstrated the extent of her involvement with and knowledge of the business’ affairs.89 The extent of any discretionary coding for tax return purposes then exercised by Mr Mohammed does not ‘challenge’ that evidence. The Judge was right to find Mr Mohammed’s evidence of his reliance on Ms Shah’s provision of financial

78	At [27].
79	At [76].
80	At [29]–[30].
81	At [43].
82	At [47].
83	At [49].
84	At [58].
85	At [66].
86	At [69].
87	At [70] and [73].
88	At [70].
89	At [75].

information unchallenged. That was not disturbed by Mr Naseeb’s and Ms Shah’s explanations in their IRD interviews she only helped him on his instruction in an unpaid capacity (denying documentation of her formal appointment).90 She there confirmed Mr Naseeb paid Supreme employees’ wages, which she recorded in Supreme’s PAYE schedule;91 also from her position as director of other companies, “she was aware PAYE deductions and GST had to be paid to IRD on time”;92 and she knew of Supreme’s overdue tax liabilities.93 The Judge rejected her claimed distance from Supreme’s operations and affairs, observing “after all she was sufficiently aware of the situation to be able to code the entries on bank account statements”.94

[39]	At base — given the evidence funds coursed through Ms Shah’s bank account from, for and to Supreme — her disclosure to Mr Mohammed only of Supreme’s annotated bank account statements for compilation of all parties’ tax returns is well beyond simple and inadvertent oversight. Given her comprehension of personal and business tax liabilities, that plainly was wrong, as indicated by her divertive responses to the IRD’s queries. The Judge accordingly had ample foundation for his explained conclusion of Ms Shah’s requisite knowledge and intention. And, given the indistinguishability  of activities carried on for herself, Mr Naseeb and  Supreme,  the Judge was justified in holding her liability similarly indistinguishable from theirs for the purposes of s 143B(2)’s “catch-all”.

—PAYE deductions

[40]	For Mr Naseeb (and relied on by Ms Shah), notwithstanding Supreme’s filing of PAYE  returns, David Weaver  submits the Judge could not have been satisfied   net wages were paid to Supreme’s employees or PAYE deductions were made from wage payments. He argues the bank accounts evidence wage payments in even dollar sums, suggestive of gross wage payments instead.

[41]	The Judge found, beyond the returns filed, Supreme made some payments to the IRD on account of PAYE deductions and both Mr Naseeb and Ms Shah admitted

90	At [87]–[88].
91	At [89].
92	At [90].
93	At [91].
94	At [92].

in their interviews net wages were paid.95 The returns consistently referred to wages paid to named employees, in respect of which Ms Shah frequently initiated contact with the IRD to correct deductions,96 as already explained.97 In light of that contact and attempted corrections, the Judge justifiably found it ‘incongruous’ Mr Naseeb and Ms Shah should seek to rely on Supreme’s poor documentation to dispute the IRD’s assessment.98

[42]	Again, the Judge had ample foundation for his explained determination of the defendants’ liability.

Conclusion on convictions

[43]	Given the basis for the Judge’s findings, there is no reasonable possibility not guilty verdicts may have been returned. The Judge’s assessment is supported by the evidence. It afforded him a reasonable basis for his satisfaction of the defendants’ guilt beyond reasonable doubt. The defendants’ convictions do not amount to any miscarriage of justice. I will dismiss their appeals against conviction.

Sentences appeal

Judgment under appeal

[44]	For sentencing, the Judge treated Mr Naseeb and Ms Shah as “equally culpable”.99  They had failed to account for GST and income tax in the amount of
$750,000 and PAYE deductions of some $80,000, which — after accounting for some
$35,000 in late payments — gave rise to a near-$800,000 shortfall over six years to 2016.100

[45]	There being no tariff decision for such offending, the Judge had regard for relevant factors of the defendants’ comparable culpability for dishonesty offending.101 To establish a starting point for his sentence, the Judge considered aggravating factors

95	At [110].
96	At [111].
97	See [34] above.
98	At [112].
99	Commissioner of Inland Revenue v Ali & Naseeb, above n 3, at [1].
100	At [5]–[6].
101	At [7], referring to R v Varjan CA97/03, 26 June 2003 at [22].

of the defendants’ offending, being its deliberate and premeditated comprehensive conduct over a period of years,102 in breach of trust by multiple means,103 without possibility of reparation.104 He had regard also for statutory sentencing criteria.105

[46]	The Judge considered the “closest authority” to  establish  a  five-year  starting point for tax evasion of some $600,000 over six years, which led the Judge to his starting point of four years and six months’ imprisonment.106 In doing so, the Judge referred to the defendants’ deliberate non-compliance despite their previous expertise in running businesses, their attempts to take advantage of Mr Mohammed’s intermediacy, their non-assistance to the IRD in its investigation, the “ample evidence” of their personal gain at the expense of the New Zealand public and their delaying matters by obfuscation to “keep the IRD at bay”.107

[47]	Turning to personal mitigating factors, the Judge found the duration of the defendants’ offending to obviate any claim to prior good conduct.108 He observed pre-sentence reports indicated their relatively low risk of offending, with low risk of harm to others.109 He acknowledged the seven-year course of the prosecution had taken its toll on them and their current circumstances meant there was little prospect of their further offending.110 But the delay largely was attributable to their conduct.111

[48]	The Judge discounted his starting point by 20 per cent on account of the defendants’ poor health and personal circumstances, and a further 10 per cent for “the impact of bail and [his] assessment of reduced prospects of re-offending in a similar way”.112 Rounded up by nearly two months, this resulted in an  end  sentence  of three years’ imprisonment.113

102	At [8].
103	At [9].
104	At [10].
105	At [11].
106	At [12], referring to Inland Revenue Department v Isherwood [2016] NZDC 21726.
107	At [13]–[18].
108	At [19]–[20].
109	At [21].
110	At [22].
111	At [23].
112	At [24]
113	At [25].

[49]	Mr Büdler and Mr Weaver both contend the Judge’s starting point was too high, resulting in a manifestly excessive sentence. Rather, they submit, the starting point should have been no more than 30 months’ imprisonment; after application of the Judge’s discounts, resulting in qualification for consideration of home detention.

Approach on appeal

[50]	I must allow the appeal only if satisfied both there is error in the sentence, and a different sentence should be imposed.114 In any other case, I must dismiss the appeal.115 To be successful, an appellant must point to an error — either intrinsic to the Judge’s reasoning, or as a result of further information submitted on appeal — that is material to the exercise of the lower court’s sentencing discretion.116

[51]	The measure of error is the sentence be “manifestly excessive”, a principle “well-engrained” in the Court’s approach to sentencing appeals.117 I will not intervene where the sentence is within a range properly justified by accepted sentencing principle. Whether the sentence is “manifestly excessive” is to be assessed in terms of the sentence given; the process by which it is reached will rarely be decisive.118

The relevant law

[52]	As the Judge noted, there is no tariff judgment for tax evasion or misapplication of PAYE deductions. He correctly identified R v Varjan to be the authority of most assistance in considering the starting  point  for  major  fraud  offending.119  There, the Court of Appeal said:120

Culpability is to be assessed by reference to the circumstances and such factors as the nature of the offending, its magnitude and sophistication; the type, circumstances and number of victims; the motivation for the offending; the

114 Criminal Procedure Act, s 250(2).
115 Section 250(3).
116 Khon v R [2024] NZCA 354 at [13], referring to R v Shipton [2007] 2 NZLR 218 (CA) at [138]; Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [30]; and Tamihana v R [2015] NZCA 169 at [14].
117 Tutakangahau v R, above n 116, at [33] and [35].
118 Ripia v R [2011] NZCA 101 at [15].
119 As approved in Wang v R [2016] NZCA 56, (2016) 27 NZTC 22-043 at [21], the Court of Appeal having noted tax evasion can be characterised as “theft from the community” (James v R [2010] NZCA 206, (2010) 24 NZTC 24,271 at [8]).
120 R v Varjan, above n 101, at [22].

amounts involved; the losses; the period over which the offending occurred; the seriousness of breaches of trust involved; and the impact on victims.

Discussion

[53]	The Court of Appeal in Wang emphasised the value of the tax evaded is merely one of the many available aggravating factors.121 The Court referred  to  the  Supreme Court’s comments in Andrews v R:122

… What was important for sentencing purposes was not the precise value of the property involved but rather the overall scope and significance of [the] offending…

The Judge correctly identified the aggravating factors here.123

[54]	The appellants’ nomination of no more than 30-month starting points is optimistic in light of the Court of Appeal’s upholding of a starting point of 39 months’ imprisonment, for evasion of over $800,000 GST by filing false or misleading GST returns over a period of six years, in respect of a secondary offender carrying out the instructions of her co-defendants.124 But I have held the Judge was justified in treating both appellants as principal offenders.125 Further, a number of the cases relied upon by the appellants for a lower starting point are not in any event of Tax Administration Act sentencing, but of Crimes Act 1961 sentencing of distinguishable offences of dishonestly taking or using documents.126

[55]	In    the    “necessarily    …    broad-brush    exercise”    of     determining  Tax Administration Act culpability,127 the Court of Appeal consistently has observed four-year and six-month starting points are “lenient” or “well-justified” in generally comparable offending.128 A critical aspect aggravating the appellants’ offending was their sustained attempt to deceive and mislead the IRD, which the Court of Appeal as

121	Wang v R, above n 119, at [21].
122	At [22], citing Andrews v R [2012] NZSC 41 at [6].
123	At [44]–[46] above.
124	Jain v R [2018] NZCA 408 at [24]–[25], referring to Mehmood v R [2015] NZCA 338, (2015) 27 NZTC 22-020 at [27].
125	At [39] above.
126 For example, R v Adams (2006) 22 NZTC 19,872 (CA); Clemm v Commissioner of Inland Revenue (2005) 22 NZTC 19,495; and R v Archibald [2019] NZDC 4490 (charged under s 228 of the Crimes Act).
127 Wang v R, above n 119, at [21].
128 At [38]; and Mehmood v R, above n 124, at [27].

consistently has observed warrants a more serious approach, given the “high trust tax compliance model”.129

Conclusion on sentences

[56]	Thus the Judge did not err in establishing his starting points. Particularly given his generous rounding of discounts in the appellants’ favour, to over one-third the starting point, it cannot be said the end sentences are without a range properly justified by accepted sentencing principle. They are not manifestly excessive in any sense.      I will dismiss the appellants’ appeals against sentence.

Result

[57]	The appeals are dismissed.

—Jagose J

129 Jukich v R [2012] NZCA 231 at [10] and [19]; and Gower v R [2023] NZCA 609, (2023) 31 NZTC 26-017 at [22] and [24], referring to R v Smith, above n 62, James v R, above n 119, and Mehmood v R, above n 124.