Case Studies - Tax Problems

The issue

The IRD is demanding $1 million in tax arrears.

"To be honest, we didn't believe Nick at first. It's true, we were in a bit of bother with the IRD (having hidden approx. $1.5m sales overseas in a tax haven at our old accountant's suggestion). Yet we didn't believe that we could be prosecuted and jailed by the IRD. Our optimism proved to be misplaced.

At our accountant's suggestion, we had hidden $1.5m sales overseas in Monaco.

After the first meeting with the IRD my business partner and I were sick with worry. On the home front, my wife gave me an ultimatum - sort it out or she was gone! As tempting as that was, I couldn't afford it. Then the IRD brought up their big guns: they raided our old accountant's house and office and our premises, looking for our files! That sort of brought the message home.

Nick made us take a realistic view on the enquiry and brought in the help we sorely needed.

Only then did we listen to Nick when he said we needed specialist advice. He suggested bringing in a top tax guy. His rate was high ($600 an hour, which at first we had thought was ridiculous) but he proved to be worth every cent of it. He in turn brought a top tax lawyer.

Between the three of them, they negotiated an excellent deal for us: Immunity from prosecution and only paying up $70,000 each (instead of half a million). My house, the business and my marriage were saved. Nick and I became firm friends, sharing many great lunches at our local Italian restaurant."

The result

The IRD only gets $140,000 - house, business and marriage saved.

The issue

IRD enquiry over use of tax haven: millions of $ at stake.

"Nick was instrumental in achieving a very favourable outcome with a particularly difficult tax situation. Our company had been set up by a firm of Swiss lawyers as a tax scheme on behalf of the Russian owners and acted only as an agent to a Bahamas based company. The idea being that the majority of the profits on the group business would be transferred to the Bahamas.

He set up a system so we could continue to trade virtually tax-free.

As one could expect, Inland Revenue was not happy seeing tax disappearing out of the country and suddenly took a keen interest in our tax affairs. Nick dealt competently with all of the complex issues including the much-feared transfer pricing issue and in the end negotiated a minor settlement to the taxman for the arrears of about $10,000 and going forward, he made sure we left a 10% return on sales to contribute some tax which allowed the group to keep the great bulk of profits tax-free. The potential tax at stake was into millions of dollars.

Nick dealt with all the complex issues.

This whole episode was conducted with Nick's normal highly pragmatic and thorough approach where all issues and potential benefits or problems were explained in full."