When Suzie was still in her twenties, she opened a hairdressing salon and incorporated her business. It didn’t make any money and eventually it went under. She just let the whole matter drop and, over the course of several years, ignored repeated notices to file corporate tax returns for the defunct business. Then the police arrived at her door with a subpoena to appear in criminal court. Suzie was being criminally charged for failure to file corporate tax returns.
Suzie and her husband were dumbfounded. There was no income in the business. There was no tax due. How could she be evading taxes? Who knew she was supposed to file tax returns for a business that had no revenue. “I’m not a criminal,” Suzie sobbed. Clearly, before coming to us, she had not received – or had not sought – appropriate tax advice.
We were retained to act on her behalf. As her legal counsel, we met with Ministry of Finance officials to investigate the situation and were told that they were cracking down on corporate non-filers. “Too many people are ignoring us,” they said. “We have decided that criminal prosecution is the only way to make these small businesses compliant. We’ll see you in court!” And that was the end of the discussion.
After two appearances in criminal court, and filing the missing corporate tax returns (which, upon careful review, did indeed show zero taxable income), we were able to negotiate the criminal charges being withdrawn. Suzie was still liable to pay a small non-filing penalty. The tax authorities had lost what was, for them, the big prize – a criminal prosecution.
The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.