Everald Dewar | Be afraid, be very afraid of tax court

The judge arrives and the constable proclaims the opening of the court.

You are in tax court hearing the usual whisperings, gathering of papers, then the accompanying shouts of names by the constable as instructed by the prosecuting team from the Tax Office.

This creates an atmosphere filled with awe that is as impressive as it is fascinating. The name of your company is eventually called, signalling your turn to face the dispensary of summary justice. You advance a few feet from the magistrate’s pulpit and stand respectfully, having no lawyer, accountant or tax adviser by your side.

The magistrate takes your name and position; thereafter, the clerk of the court announces the charge: that both the company and yourself are jointly accused of failing to file and pay over GCT against the law of the land and the peace and dignity of the realm.

You are then asked whether you are guilty or not of the charge.

You stand there with a meditative face, thinking: I am not a thief nor connected with thieves. Thoughts of the carelessness of your accountant and your lack of oversight play a part in all of this. Perhaps if you plead guilty with explanation as an honest, open-hearted man, putting the blame all on the accountant, it might be examined by the judge with some leniency as much as justice would allow. You may be told to go your way and sin no more.

With the kind permission of the judge, you avail yourself the chance to admit your guilt while giving a plausible explanation to smooth out the effect.

Well, says the magistrate, having pleaded guilty then by consent, you are fined “$100,000 or 10 days”.

You look around the court as if in search of the person on whom the sentence was passed. Then it sinks in – unless this sum is paid now, you will spend tonight and nine other nights in a lock-up. As you look around, your attention is focussed on the apparatus almost in the middle of the room, a sort of wooden pen in which prisoners are deposited.

When going into business, never in your wildest dreams had you expected that time in a lock-up might be part of your fate.

Not filing a tax return was the cause of the entire disturbance, but does it warrant it to sent to goal, a place occupied by some of the most atrocious felons, tried, found guilty, under sentence of death? The reality and all your fears comingle, leading you to contemplate a horror that was too palpable to be mistaken. You stand to be imprisoned – perhaps with hard labour – and for what? Not filing a tax return? This is enough to make the angels blind with weeping.

You tremble at the awfulness of the scene and think: Who is this magistrate, under the protection of the bench, to be offering such peremptory order, an insult, to a respectable person just trying to earn an honest living?

Your indignation is greatly roused. You have the intention of telling the magistrate this is unfair and that you will not pay. But on reflection, giving vent to this feeling would only infuriate the magistrate and add to the severity of your predicament. You could be seen as an impertinent fellow, daring to try to bully a magistrate, and deserving of punishment for disrespecting the bench.

Instead, you call on your fellow director to fetch the funds and return with the payment.

While you wait, you have all the time to think about how these courts exercise summary and arbitrary power over the liberties, the good name, the character, almost the lives, of Her Majesty’s subjects, especially the poorer class. Eventually you pay the fine.

“You may go, sir,” says the magistrate, with what you consider to be ill-grace. With a polite and gentlemanly inclination of the head, you leave the court but not before contemptuously surveying, from head to foot, the officer prosecuting the matter. This was good annoyance, safely directed.

The lessons you learnt are that tax hearings are civil but basically criminal in nature. The laws impose fines and confinement.

There you were thinking these magistrates were hardened in wickedness, having no heart when executing their evil sentencing. However, the maximum penalty for this offence is $1 million. Your $100,000 fine made you realise that judges can be benevolent.

Your anger should best be directed at our lawmakers. But that is an issue for another time.

Everald Dewar is Associate Partner at BDO Chartered Accountants.

everald.dewar@bdo.com.jm