Husband-and-wife team jailed for fictitious expenses claims

12 Jul 2019

Electric goods company penalised for wrongful claims of private expenses

Candid Electric (S) Pte Ltd (“Candid Electric”), an electric goods dealer for the marine industry, and two of its company directors, Foo Ming Chee (“Foo”) and his wife Lim Kim Wah (“Lim”), have been convicted for tax offences.

Candid Electric understated its income by incorrectly claiming private expenses incurred by the two said directors in its tax returns for Years of Assessment (YAs) 2006 to 2010. These private expenses included luxury goods purchases such as handbags and jewellery, as well as family holidays. Candid Electric had committed offences under Section 95(2)(a) of the Income Tax Act by making incorrect returns without reasonable excuse. Candid Electric was found guilty and sentenced to a fine of $4,000 and a penalty of $36,411, which is two times the amount of taxes undercharged.

In the same Court, Foo faced a total of five charges under Section 96(1)(b) of the Income Tax Act for wilfully with intent, assisting Candid Electric to evade taxes for YAs 2006 to 2010. He did so by making false entries in Candid Electric’s income tax returns, claiming fictitious expenses amounting to $929,460. Lim, on the other hand, faced five charges under Section 96A(1)(a) of the Income Tax Act for wilfully with intent, assisting Candid Electric in its evasion by preparing false invoices and payment vouchers which supported the fictitious expense claims. The actions of both Foo and Lim resulted in $175,545 in tax undercharged.

Proceeded Charges

Foo and Lim pleaded guilty to 2 charges each, with the other charges being taken into consideration for the purposes of sentencing.

Foo was sentenced to a total imprisonment term of 4 weeks and ordered to pay a penalty of $440,309, which is three times the amount of income tax evaded. Lim, on the other hand, was sentenced to a total imprisonment term of 6 months and ordered to pay a penalty of $587,079, which is four times the amount of income tax evaded.

IRAS Warns Against Tax Evasion

For income tax purposes, business expenses claims should not include fictitious expenses or expenses that are private in nature such as private entertainment and luxury goods expenses.

IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who wilfully evade tax. The authority will not hesitate to bring offenders to court. Offenders may face a penalty of up to four times the amount of tax evaded. Jail terms may also be imposed.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes or report malpractices can write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987

Email: ifd@iras.gov.sg

Cash Rewards for Informants

A reward based on 15% of the tax recovered, capped at $100,000, will be given to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS will ensure that the identities of informants are kept strictly confidential.

 

Inland Revenue Authority of Singapore