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Lawyer fined for failing to pay IRD KiwiSaver and PAYE

27 September 2016

A lawyer, C, who deducted KiwiSaver and PAYE contributions from employees but failed to send the money to Inland Revenue has been censured and fined $3,000 by a lawyers standards committee.

Two former employees of C complained that he had deducted KiwiSaver contributions and PAYE from their pay but did not pay the money to Inland Revenue. A third former employee complained about PAYE deductions not being forwarded to Inland Revenue.

All three had approached C at different times and notified him that their PAYE and KiwiSaver (in the case of two former employees) had not been paid to Inland Revenue.

After attempting to resolve matters directly with C for some months, the employees complained to the Lawyers Complaints Service.

C told the standards committee that he accepted responsibility for the matters the former employees raised. He said that initially he thought the problem was with Inland Revenue, but acknowledged that some returns had not been sent.

C advised that he was in discussion with Inland Revenue to clear all PAYE and other employee deductions due. He was refinancing his house and hoped to be in a position to clear the debt as soon as possible.

All three employees commented on C’s response. Two noted that there was no apology and raised concerns over his prioritisation of funds. One noted a new vehicle and overseas trips by C’s wife. The other noted C’s purchase of another law firm.

Two noted that C had ample time to investigate and rectify the issues, and one noted that for six years before she left the firm C had an accountant working for him whom he should have delegated the accounting to.

C’s letter did not address the lack of KiwiSaver payments, one of the employees said.

One said she had engaged legal representation to assist her with the large bill she was facing from Inland Revenue.

The standards committee noted that C advanced a number of factors for why the breaches happened. These included difficulties arising from a change in tax number and a concession that C had simply lost control of filing due to pressure of work.

“The committee acknowledged that these factors may have made matters difficult for [C], however this did not excuse the length of time it had taken for [C] to take action to correct the breaches once he became aware of them.”

The committee considered that C had breached various provisions of the KiwiSaver Act by deducting contributions and failing to send them to Inland Revenue. The committee found that constituted unsatisfactory conduct.

The committee also considered that C had breached various provisions of the Income Tax Act by deducting PAYE and not paying it to Inland Revenue. The committee found that constituted unsatisfactory conduct.

By both breaching the KiwiSaver Act and the Income tax Act, C had “breached both his legal and professional obligations. In the committee’s view such was conduct that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer”.

As well as the censure and fine, the committee ordered C to apologise to each of the complainants individually and to rectify matters by providing all returns and payments to Inland Revenue. C was also ordered to pay $1,000 costs.

After deferring a decision on compensation, a further determination of the committee found that C had made payments for compensation claimed, and considered that a compensation order was not required in the circumstances.

Last updated on the 27th September 2016