Used car dealership Von's Motor and Company Limited is in trouble with the law after claims that it did no business in 2018 and 2019 were proven false by Tax Administration Jamaica (TAJ), through its Intelligence, Investigation and Enforcement and Legal Unit which found that the company collected millions from the Jamaica Urban Transit Company (JUTC) in those years.
On Monday, Loraine Von Strolley, a director and principal officer of the company, according to the court, pleaded guilty to four counts of making a false declaration, a breach of Section 99 (1) of the Income Tax Act. The company and its director were jointly charged with two counts each.
An attorney for the TAJ, in outlining the allegations, said the car company had filed 'nil for gross income' for the years 2018 and 2019.
"They filed gross for nil income and what that means is that no trading took place those years, but our investigations revealed that the company conducted business with the Jamaica Urban Transit Corporation [JUTC], valued at $25.873 million in 2018 and worse, in 2019 the JUTC paid over $64.6 million [to Von's]. As a consequence, the company and its principal officer are before you for breaches of Section 99 of the Income Tax Act, making a false declaration," attorney Julaine Manderson told the court.
An attorney for the company, in attempting to explain why the incorrect information was filed, said the then accountant for the company had fallen ill, making it difficult for the financial records for those years to be accessed. He said the company's new accountant was unable to get those records and so filed the returns as "nil".
Asked by the judge what "evidence" was being presented to prove that the accountant had been ill, the attorney, in stating that there was "nothing to show", further claimed that that accountant had since migrated. He said the new accountant was taking steps to put the company in good standing. He said efforts were being made to get information through the banks in order to straighten the missing records for those years.
The company's attorney, in responding to Judge Christine McNeil's note that she had no evidence that those efforts were in fact being made, said the auto dealers were mindful and were throwing themselves on the mercy of the court, but argued that the entity, which has been operating for well over a decade, has been faithful in filing.
The TAJ's lead counsel, however, said its records showed "a trail of late returns" by the company.
Judge McNeil, in noting that this "was a very, very serious offence", scolded Von Strolley, who appeared with her new accountant in tow, for her handling of the matter.
"Let me talk to you for a second; you see, you are the one taking the [fall] even though you are not the one doing the [accounting]. You have to check on the accountant to see that what should be done, is being done," the judge said sternly.
In the meantime, the company requested and was given a month to collect and collate the remaining statements from its bankers for the missing years in order to see the full liability.
The elderly, white-haired Von Strolley was subsequently bound over to reappear before the court in April when she will be sentenced.
Under the Income Tax Act, "any person who, for the purpose of obtaining any allowance, reduction, rebate or repayment in respect of income tax either for himself or for any other person, or who in any return, statement, declaration, form or particulars delivered under this Act, knowingly makes any false statement of false representation, commits an offence, shall be liable, in the case of a first offence, to a fine not exceeding $2 million, and, in default of payment thereof, to imprisonment for a term not exceeding one year".
Chief corporate communications officer for TAJ Meris Haughton told the Jamaica Observer that prosecution is "a last resort".
She said: "[Evasion] is an issue, it is something we constantly look at through our compliance efforts. We also educate persons as to their rights and responsibilities. At times we highlight some of the cases that go through the courts, we promote what happens in terms of what the court has ruled and use that as an opportunity for persons to see that there are in fact consequences. Our compliance efforts have been stepped up as well as the support from our legal support unit to ensure that we protect the Government's revenue."