It was reported on IRAS’ website on 4 June 2018 that a former professional electrical engineer, Ng Hai Hock, who owned a sole proprietorship, NHH Consultants, was sentenced to 6 weeks’ imprisonment and ordered to pay fines and penalties totaling $180,105.37 after being found guilty of evading income taxes as well as failing to register for GST. In addition, Ng is required to pay a total of $533,504.25 in back-dated taxes to IRAS.
IRAS’ Investigations revealed that in 2007, Ng was liable to notify the Comptroller of GST of his liability to register for GST by 30 Jan 2008. However, he failed to do so by the due date, thus failing to account for GST on taxable supplies provided by NHH Consultants.
Further investigations revealed that Ng had wilfully evaded taxes by omitting to declare the income earned by him from NHH Consultants in his income tax returns for YAs 2008, 2009, 2010 and 2012.
Ng had also failed to file his income tax returns for YA 2011 despite the fact that he was issued a No-Filing Service (NFS) letter by IRAS. This is because he had earned income in YA 2011 beyond what was auto-included and thus did not meet the conditions in the NFS letter.
Ng faced four charges of evading income taxes for Years of Assessment (“YAs”) 2008 to 2010 and 2012, as well as one charge for failing to file his income tax returns for YA 2011. These five offences had resulted in Ng failing to account for $80,399.01 in income taxes to IRAS. In addition, he faced one charge for failing to register for GST between 1 March 2008 and 31 December 2011, which had resulted in Ng failing to account for GST totalling $453,105.24.
For the two proceeded charges on income tax evasion, Ng was sentenced to 6 weeks’ imprisonment. In addition, the Court ordered Ng to pay a penalty of $129,794.85, which is three times the amount of income taxes evaded.
For failure to register for GST, the Court fined Ng $5,000 and ordered him to pay a penalty of $45,310.52, a sum that is 10% of GST due.
What does this mean to you?
All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income and regularly assess if they need to register for GST. Any business that fails to register for GST is still required to pay GST on all their past transactions from the date the business became liable for GST registration. GST is payable even if the amount was not collected from customers. In addition, failure to register for GST is an offence and businesses may be required to pay 10% of GST due as a penalty, and fined up to $10,000.
IRAS takes a serious view of non-compliance and tax evasion. Any person who fails or neglects without reasonable excuse to furnish a return of income shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000, and, in default of payment, imprisonment for a term of up to six months.