Tax Evasion — evading assessment of GST, PAYE and income tax — whether defendant had sufficient knowledge of tax obligations — whether tax liability existed — whanau trust bank account — Tax Administration Act 1994, ss 89C, 114, 143B(2), 168 — Income Tax Act 2007, ss RD4(1), RD21 — Pongi v R [2012] NZCA 127 — Skinner v R [2016] NZSC 101. The defendant faced charges of tax evasion relating to GST, PAYE and income tax. The offending took place between 2004 and 2014, and all charges were brought as continuing offences. The charges arose from two audits into the defendant's business, the first covering the years 2005-2009 and the second the years 2010-2014. The offence of tax evasion involves an element of intention to not pay tax, rather than a mere failure to pay. The defendant claimed that as a result of advice he had received, he had held an honest belief that he had no obligation to pay tax; therefore there was no intention to avoid making tax payments. Further he argued that he had no actual tax liability for some of the years covered. He argued that there was no obligation to pay PAYE as he had not deducted PAYE from his employees' net wages anyway. The court found that there was no proof the defendant had deducted PAYE and there was also no proof of the defendant's obligation to pay. The defendant was acquitted on this charge. The court turned to the payments of income tax and GST in the first audit period, 2005-2009. During this period the defendant had received advice from an anti-tax advocate to establish a bank account named “whanau trust” into which he received income and from which he made business overhead payments. The advocate had advised that money coming into this account would be exempt from all taxation obligations. The auditors had interviewed the defendant during the audit, and after learning about the whanau trust account, had issued reassessments of the defendant's income tax and GST liability. The defendant argued that these reassessments were unlawful as there was no proper basis for them to be issued. Therefore the reassessments gave rise to no tax liability. The prosecution argued that the reassessments were lawful because it was the outcome of an agreement between the defendant and the auditors, as allowed for by s 89C(d) of the Tax Administration Act. The court found that the agreement contained no resolution of a significant issue: the amalgamation of the defendant's bank accounts. The prosecutor did not follow the correct procedure, therefore the reassessments were unlawful. However, the court found that in spite of the prosecutor's failure to follow proper procedures, the defendant's taxation and GST liabilities remained. The charges relating to the first audit period (2005-2009) stood. During the second audit period (2010-2014) the defendant was being advised by a third anti-tax advocate, who also advised him that persons operating a business under the umbrella of a Maori incorporation were not subject to the New Zealand tax laws. The defendant pleaded that he genuinely believed this advice, thus he had no intention to commit tax evasion. The court found that the defendant, an experienced businessman, had successively sought the advice of three advisors espousing an anti-tax philosophy. He had followed their advice, ignoring contrary advice from his accountant, and had failed to get legal advice. He had also ignored IRD's advice of his obligations. He had taken other active steps to avoid his obligations, including withholding documents from the auditors. The court found that the defendant had intentionally evaded his tax obligations. He was convicted on the charges relating to GST and income tax. The parties disagreed on the extent of the defendant's tax liabilities. They had a difference of opinion on whether deductions could be made for subcontractor payments during the first audit period. The court was unable to resolve the dispute with the information available, and called for further submissions. The defendant was remanded on bail for sentence. Judgment Date: 4 July 2018.