14th Jun 2007
(Subordinate Courts, Court 8, 2.30 p.m.)
Foo Ah Tuang (“Foo”), a consultant who assisted the accounting works of Tonsen Manufacturing Pte Ltd (“Tonsen”) during 1991, was charged for abetting a director to inflate its purchases by using fictitious invoices of Hugeteam Trading (“Hugeteam”). Foo was then the sole proprietor of Hugeteam.
On 28 October 2005, Tonsen was convicted for inflating its purchases by using fictitious invoices of Hugeteam. One of its directors was also charged for assisting Tonsen to claim for the inflated purchases by filing incorrect income tax returns without reasonable excuse.
Further investigations carried out by IRAS found that Foo had abetted the director to make the fictitious claim. Foo is prosecuted on two counts for abetting the director to prepare two fictitious billings of his firm, Hugeteam.
Under the Income Tax Act, Foo is liable to a penalty equal to double the amount of tax evaded in addition to a fine not exceeding $5,000 and to imprisonment for a term not exceeding 3 years or both.
Modus Operandi
At the time of the offences, Foo was the sole proprietor of Hugeteam. He had used the invoices of his firm to help the director of Tonsen to inflate its purchases in 1991.
On Hugeteam’s invoices, Foo fictitiously billed Tonsen by inserting certain items including descriptions and prices of goods purportedly sold to the company. At the time of inserting those items in the said invoices, Foo knew that no such purchases were actually made by Tonsen. Foo then gave those invoices to Tonsen, knowing that they would be used by the company to inflate its purchases. In return for doing this, Tonsen paid Foo an amount equivalent to 1.5% of the invoiced sum. Payments to Foo were made in cash and cheques.
First Time a Company Consultant is Prosecuted
This is the first time a company consultant assisting the accounting works has been prosecuted for assisting a director to submit an incorrect tax return. IRAS will not hesitate to prosecute anyone, not necessarily company directors, who abet in filing incorrect income tax returns.
First Time the Penal Code is Invoked
This is also the first time that IRAS has invoked Section 109 of the Penal Code to prosecute a person for helping a director to abet a company to submit an incorrect return. On conviction, the person who is charged may be liable to the same punishment as the person whom he has assisted.
Sentencing
At the mention today, prosecution proceeded with the 1st and 2nd charges. The accused pleaded guilty to the two charges which were proceeded with and admitted to the statement of facts.
The judge found the accused guilty and convicted and sentenced the accused to:-
a) $1,000 fine and $53,089.40 penalty (double the amount of tax undercharges) – in respect of the 1st charge.
b) $1,000 fine and $38,126.82 penalty (double the amount of the tax undercharged) – in respect of the 2nd charge.
Members of the Public may report Malpractices
Taxpayers who wish to disclose errors in their income reporting and anyone who wishes to report malpractices that indicate possible tax evasion may write to IRAS using the following addresses:
Email : iid@iras.gov.sg
Address : Investigation & Intelligence Division,
55 Newton Road,
Singapore 307987
IRAS will ensure that the identities of informants are kept confidential. Errors or omissions voluntarily disclosed are subject to penalties that are much lower than that of cases arising from audit or investigation.