Posted on Aug 01, 2019
This was the message repeated over and over to us as a youngster as an assistant to a builder. It’s a message not forgotten. And it can be applied in so many more fields than just carpentry.
When recently we were presented with an opportunity which involved a vendor who was not registered for GST, we were careful to check not just twice, but several times, that this was the case. And so too did the agent. The correct statements were made, and appropriate boxes ticked, that the vendor was indeed not registered for GST. There was even an email trail with the vendor’s solicitor to confirm.
So we went ahead with the transaction. We refurbished the building, installed a tenant at a market rental, and then sold the building as a tenanted investment. Everyone was happy - Tenant, Investor, Tradespeople. And we made a small, and deserved, margin on the project.
Our GST return was lodged, and in due course we anticipated a refund based on the vendor of the property not being registered for GST.
The IRD advised that a refund would not be forthcoming. Yes, we had done everything correctly. Yes, we had the boxes checked, and the emails to prove that the vendor claimed not to be registered for GST. But, in fact, the vendor was registered for GST. So, no refund. But there was good news – the IRD would not penalise us for making a false claim!
To recover the GST, which was more than the nominal margin we had supposedly made on the project, would be a civil matter.
Even though we had adhered to the lessons of our youth – and measured more than twice before cutting – we are still significantly out of pocket.
Proving that there is a new scam around every corner, and plenty of opportunists ready to pick your pocket if you give them a chance.