Couple evaded taxes for years, court hears
A couple at the head of a building-materials supplier evaded HK$3.8 million in taxes by reporting false purchases made from a company that they set up in the British Virgin Islands, a court heard yesterday.
Chik Wen-fei, 52, and her husband Chan Yeuk-yu, 51, went on trial in District Court on 15 counts of tax evasion and one of cheating the public revenue. Chan pleaded not guilty. Chik refused to plead, which Deputy District Judge David Dufton took as a plea of not guilty.
The court heard that at the time of the alleged offences the couple were shareholders and directors of Cheung Shing Yuk Tong Co (CSYT), which provided building materials and colour finishing for sports ground surfaces. They are accused of furnishing false purchase expenses to the Internal Revenue Department to understate their profits by HK$23.6 million and evade HK$3.79 million in taxes from 1994 to 1999.
Opening the case, prosecutor Jonathan Acton-Bond said that in February 1991, Chik and Chan set up Wai Fong Associates Ltd, registered in the British Virgin Islands.
False purchases from Wai Fong accounted for 18 per cent of the expenses that CSYT claimed for deduction, Mr Acton-Bond said, and CSYT, as a result, understated its assessable profits by 43 per cent. But nothing in the firm's tax returns or annexed financial statements showed the existence of Wai Fong, the company's relationship to Wai Fong, or the transactions, he said.
Wai Fong had no staff other than Chik and Chan, its directors, and no establishment in Hong Kong.
When tax officers visited CSYT in August 2000, they discovered that a debt of HK$27.3 million to Wai Fong was shown on the company's books.
Mr Acton-Bond said this had been repaid by channelling substantial sums of money through what he termed 'the scenic route'.
The trial continues.
