A Little elephant in the room

The e-mail from Andrew Little to SB was the final straw, especially the bit where he said:

We’re not the sort of country that wants to be known as a haven for the global mega-rich to hide their wealth and avoid paying their fair share. We’re better than that.

In a way, Little is right; we ARE better than that. But not in the way he implies.

Most Kiwis grudgingly meet their tax obligations. We don’t like it, but as they say in the classics, there are only two certainties in life; death, and taxes. And as fair-minded Kiwis, we have a level of distaste for those who deliberately evade the taxman.

And that’s where Andrew Little is vulnerable, and where his hypocrisy needs to be called out. You see, he employs a tax evader as his Chief of Staff. This is not a smear, but an established fact as reported by Stuff on 26 July 2011:

Inland Revenue is chasing unionist Matt McCarten’s Unite Support Services for $150,750 in unpaid taxes after the department forced the company into liquidation last month.

McCarten’s vehicle, which supplied administrative support services to the youth-orientated union Unite, was put into liquidation by a High Court order last month after the IRD pursued it for “failure to provide for taxation,” according to the first liquidator’s report.   

First things first. Unite Social Services Limited was a private company, owned by one Matthew Patrick McCarten of Auckland. Incorporated in 2003, the Companies Office reports the company went into liquidation on 17 June 2011, and was removed from the Register of Companies on 26 July 2013.

When it went belly-up, Unite Support Services Limited owed IRD in excess of $150,000. But that’s not the worst part, the original Stuff article notes:

The Unite union assigned an interest in a lease and the provision of educational activities to McCarten’s company, according to its 2009 financial statements, the latest lodged with the Companies Office. The union has the right to take action against McCarten’s company if there’s a default on the lease agreement.

The union ran afoul of the IRD after failing to pay tax on revenue accrued between October 2007 and March 2009. After racking up $134,000 in unpaid tax, it agreed to repay that at a rate of $8000 a month.

The company reported a net deficit of $33,700 in the 2009 year and made a loss of $15,500 the year before.

In addition to USS Ltd’s $150,750 the Unite Union itself, run with an iron hand by McCarten, ran up its own tax bill of $134,000. And to make matters worse, a good portion of this was unpaid PAYE that had been deducted from the staff on the Unite Union on pay day, but not passed on as legally required by the union.

Are you starting to see where this is going? Wait until the next instalment then!

 


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  • Dave

    Perhaps, one needs to ask the Angry venting man, if he is concerned about the Mega Rich, and their funds?? Andrew, have you ever accepted a donation from a mega rich person ?

    And, did you not cuddle up to the mega rich Kim Dot Com Andrew, and didn’t one of your underlings, Clare Curran stay a night or two soliciting funds from him Andrew?

    All too inconvenient for Angry to remember, I only hope he is not living in a glass house.

  • Pluto

    From where i sit the agreement between McCartens company and the union would have to be subject to normal commercial conditions ie personal guarantees etc.
    Anything else would have to represent a conflict of interest would it not ?
    So did the union, run by McCarten call up debts on McCarten ?

    • OT Richter

      Maybe Martin Martyn knows the answer to that. On the face of it the setup seems conflicted and a money-go-round.

    • Time For Accountability

      I was always uncomfortable with by the side company was there in a union situation.
      It smells very much like the side company and Trust to the EPMU under littles time which both soaked up several million of losses and which were never explained properly in the EPMU accounts.

  • Christie

    Tax havens are legal. NZ is not a tax haven. But the implication that we are deliberately encouraging evasion of tax liabilities is completely incorrect. And please don’t forget that the current rules were set up in 1988. Under Labour. I suspect the possibility of them being used by money launderers never occurred to anyone in 1988. Nevertheless, this is just the latest in a very long line of things that Labour is blaming John Key for. The guy is delusional.

  • Cadwallader

    Is it the Union which owes the tax or does McCarten owe it personally? If it is the Union then surely the IRD ought to have commenced recovery proceedings long since? (The same would apply Vs Mccarten.) The difference is that should the Union owe the tax it’ll be insolvent and in all likelihood be without assets, if it is Mr McCarten and he doesn’t have the funds to clear the debt, then his personal assets are exposed to the IRD. The proceedings would eventually make the Court Hearing list and be available for public consumption. Then Little is in a spot for his self-righteous and irresponsible allegations. That is a show not to be missed!

    • Keeping Stock

      As I understood it at the time, there were two separate defaults; one by Unite Union, of which McCarten was boss, and one for McCarten’s company, which was a contractor to Unite Union. It looks like both were averse to paying taxes.

      • OT Richter

        Surely there is a conflict of interest with him contracting his own company to provide services to the union he heads.

        • GT

          Only if it was a national staffer

      • Time For Accountability

        Correct.

  • CheesyEarWax

    Can Andy confirm that Sue Moroney, and all Labour MPs, haven’t minimised their personal tax liabilities by negative gearing their rental properties? So all Labour MPs are paying “their fair share”?

  • Boss Hogg

    I am looking forward to next installment. As a general observation regarding tax havens, I have not seen many international superyachts flagged in NZ. Might be an indication at some level.

  • cows4me

    They need to update their “fair share” line. “Everyone should pay their fair share to the socialist leeches”.

    • Kiwiracer

      I work in an industry where we act as an agent for a major reputable finance company, by that we collect the information for the finance company to make the decision, now I am not making any judgement but just stating facts and these are people who work but are in low paying jobs, a lot of the time have been in the job a number of years, however when PAYE and WFF are taken into account they are actually tax negative, receive more in WFF than PAYE, and it is just not the odd occurrence either.

      • cows4me

        To true Kiwiracer, it’s only the privileged in this country that have to pay their fair share.

        • Miss Phit

          I never thought of paying tax as a privilege…

    • Hard1

      Can’t you just imagine the Leeches sensing you, falling out of the tree at the exact right moment, landing on you, moving into position, applying anesthetic and sucking your blood until bloated. The Leech is only ever useful to another Leech. The Leech is on Earth to suck blood and make more Leeches. No other purpose really, and certainly a useless part of the ecosystem.

  • Kiwiracer

    Maybe Labour should assess the state of there bunker before they start throwing scud missiles. . . .in quick succession

    • Keeping Stock

      Too late for that I think Kiwiracer. It’s not as though David Cunliffe didn’t know McCarten’s background when he hired him, and it’s not as though Andrew Little refused to work with him when he took over.

      • Kiwiracer

        Way too late. . . . . .

  • Old Dig

    You’re right Andrew, we don’t want mega rich people coming into NZ and bringing billions of dollars with them. What we actually need are more unemployable refugees to milk our tax dollars and…………………………wait, what?

  • Huia

    This is what happens to people who live in glass towers and who start throwing stones, one will bounce back and hit them on the tip of their little pointy head.

  • Disinfectant

    The question that you have posed; Are you starting to see where this is going?
    – maybe criminal proceedings for failing to account for PAYE!

    • Boss Hogg

      Good point. I know someone who wore an ankle bracelet for six months for PAYE fraud and he only owned a small business with less than 10 staff.

  • Sally

    Has any of the money been paid or has it been all written off. Maybe Mr Little can tell us.
    Those who live in glasshouses should not throw stones.

  • Spiker

    A few years have passed by now. Surely there has been some resolution one way or the other.. yet nothing reported?

  • Time For Accountability

    They way I explain this to people is – The employer knowingly and deliberately chose to apply the deductions taken from and held in trust for the employees and used it for other purposes.
    That is theft with all the elements of theft ticked.
    The next point is to determine where the money went. If it went to reduce the bank debt the bank should be required to repay it. If it went to the owners pocket the next stop should be jail and a ban on running a company if the offence related to a company.
    I was always uncomfortable with the circumstances around McCarten’s paye issues and wondered if someone pulled political strings to get preferential treatment from the IRD. It has a very smelly stench about the way it was handled by the IRD.

  • Hard1

    Money still owed to the IRD accrues around 20% interest plus penalties plus interest on penalties. It’s either paid off, become massive, settled behind closed doors or corruption is involved.

  • Graeme

    Looking forward to see the interviewers on Q&A and the Nation ask little about this .will probably have to wait a very long time.

  • Mark

    This has been truly doing my head in,we could wish New Zealand was a Tax Haven & I have long said we should be so.
    Now if we start discussing that I’d be impressed,until then I have to put up with the muppets from the Media & Labor parties having no ideas,no policies & KDS.

  • shykiwibloke

    Remember tax is assessed as a percentage of income. To owe that much tax I would imagine there must be a significantly larger amount of income. Not bad for a poor wee downtrodden unionists company looking enviously at rich people.

  • RockinBob625

    Enough of this – time for an OIA request as to progress on this case.

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