Inland Revenue has won a High Court case against Eric Watson’s Cullen Group over a nearly $52 million tax debt.
After a nine-day trial in Auckland in August and September last year, Justice Palmer delivered a written decision on March 12, 2019, dismissing the Cullen Group’s challenge to the $51,496,127.38 tax assessment.
IRD Legal Services Leader Karen Whitiskie described Justice Palmer’s decision as “culmination of a lot of hard work by many people.”
“The outcome of the High Court process is the result of hard work and dedication by the Inland Revenue team, Crown Law and Counsel. This was a long running issue and shows the dedication of our people in unravelling what went on,” she said.
Restructured Business
Eric Watson moved from New Zealand to the United Kingdom in 2002 and restructured his business affairs so his shares in Cullen Investments Ltd (CIL) were replaced by loans owed by Cullen Group Ltd (Cullen Group) to companies in the Cayman Islands.
“Mr Watson retained a high degree of control over the relevant entities and was on both sides of the loans. The Court found it was a tax avoidance arrangement and void against the Commissioner,” Ms Whitiskie said.
“Cullen Group was paying tax at a lower rate than it should have been. It paid Approved Issuer Levy (AIL) at 2%, when it should have paid Non-Resident Withholding Tax (NRWT) at 15%.”
Justice Palmer dismissed the challenge and ruled Cullen Group is liable for the $51.5 million of tax, plus use of money interest.
The parties will now carefully consider the judgment and have until Tuesday, April 9, 2019 to file an appeal.
Source: Inland Revenue Department
