Tony Chan tries to stop tax chiefs chasing bank
Austin Chiu and Anita Lam
Fung shui master Tony Chan Chun-chuen is challenging an effort by the Inland Revenue Department to recover almost HK$350 million in profits tax he allegedly owes by asking a bank to hand over this sum from his account.
In April the Inland Revenue Department submitted a writ to the District Court claiming Chan owed the government profits tax of HK$115.6 million for the 2005-06 financial year and HK$231.2 million for 2006-07. This corresponded to the tax that would be likely to have accrued on three sums of money Chan received from Nina Wang Kung Yu-sum, Chinachem chairwoman, before she died in April 2007.
Chan yesterday applied to the court to set aside the Inland Revenue Department's action. He argues that the money was given to him by Wang as a gift, while her family argues the money was payment for fung shui services.
Chan lost an expensive court battle with the Chinachem Charitable Foundation over who should inherit Wang's HK$100 billion fortune.
He applied to the District Court to set aside the recovery notice the Inland Revenue Department served to Citibank on April 23.
Master Simon Lo adjourned the case pending a reply - expected within 28 days - by the Inland Revenue Department to Chan's application.
A spokesman for the department said it was empowered by the Inland Revenue Ordinance to issue recovery notices to third parties, such as employers, bankers, and tenants, when pursuing defaulting taxpayers.
A spokesman for Chan said the fung shui master did not believe the department had the right to confiscate his assets.
Tim Lui Tim-leung, a tax partner with accounting firm PricewaterhouseCoopers, said: 'The department apparently kick-started the collection phase as it sees a case of long overdue payment on undisclosed income, but Chan will probably dispute the nature of this income - saying it was non-taxable.'
During the legal battle over the estate, Chan told the Court of First Instance that between 2005 and 2007 Wang gave him nearly HK$2.1 billion out of love. Lawyers for Wang's family said Wang paid the money to the fung shui master for services designed to prolong her life.
According to the Inland Revenue Ordinance, a taxpayer can challenge the amount demanded by the department if he considers the assessment unjustified or based on incorrect information. Appeals are heard before a review board and rulings are subject to further scrutiny by the courts - all the way to the Court of Final Appeal.
Chan is likely to demand a postponement of the tax collection and the assessment appeal pending the final outcome of his probate action.
The tax authority is also chasing Chan for HK$661,481 for 23 separate property tax items ranging from HK$5,040 to HK$84,420 over five years from 2004 to 2009.