The court has ordered Double H Switchboard Market Pte Ltd (“Double H”) and its 61-year-old manager, Fong Looi Hoei (“Fong”), to pay a total penalty and court fine of $295,258.65 for the unlawful collection of more than $30,000 of GST from customers when the company was not a GST-registered company.
Unlawful collection of GST
It is a serious offence for businesses that are not GST-registered to charge and collect GST from their customers. Offenders face a penalty of 3 times the amount of tax collected without authorisation, and a fine of up to $10,000 for each offence.
IRAS conducts audit programmes to identify non-compliance of GST laws, including checking on whether businesses charge, collect and claim GST correctly. This case was uncovered in one of such audit programmes.
How the offence was committed
Fong and her husband ran a sole-proprietorship business, Double H Switchboard Market (“DHSM”), from 4 Aug 2004 to 3 Aug 2005. They set up another company, Double H on 16 Jun 2005 and closed down DHSM after that. Although Fong’s three children are registered as the directors of Double H, the business is effectively run by Fong and her husband. Fong is in charge of the company’s accounting, bookkeeping and administrative matters.
IRAS’ investigations revealed that Fong had issued 42 and 156 invoices with GST amount under DHSM and Double H respectively between Dec 2004 and Jul 2006. She had unlawfully collected a total of $38,371.80 in GST from her customers when both DHSM and Double H were not registered for GST. Double H was only registered for GST with effect from 1 Aug 2006.
Fong faced a total of 198 charges on unlawful collection of GST. She pleaded guilty to 66 charges that were proceeded on, with the remaining 132 charges taken into consideration for sentencing. She has to pay a tax penalty of $91,598.70, which is three times of the unlawful collection of GST amounting to $30,532.90. Double H was also ordered to pay a tax penalty of $62,059.95 on 52 charges that were proceeded on, with the remaining 104 charges taken into consideration for sentencing.
The court also fined Fong and Double H $1,200 on each charge, which amounted to $141,600.
How to check if a business is GST-registered?
Report GST malpractices to IRAS
Anyone who wishes to report cases of malpractices by businesses can write to:
Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Email: [email protected]
Cash Rewards for Informant
A reward based on 15% of the tax recovered, capped at $100,000, would 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 would ensure that the identities of informants are kept strictly secret and confidential.Inland Revenue Authority of Singapore