Raids target Queenstown's 'hidden economy'

The taxman raided three high-risk hospitality businesses in Queenstown and made unannounced visits to six others, targeting unrecorded wages and cash sales.

Inland Revenue (IR) compliance staff searched the three businesses under warrant over four days earlier this month, as part of its 'hidden economy' campaign targeting the hospitality sector.

Cafe, restaurants, bars and takeaways are the focus of the renewed campaign, which follows the successful prosecution of five siblings in the Thai House case - for $2.3 million in tax evasion over seven years of operating restaurants.

IR spokesman Richard Philp said the recent visits to Queenstown businesses have confirmed the sector has a high risk of cash sales not being reported and employees being paid under the table.

''We certainly observed those behaviours during our visits.

''Using court issued warrants, IR staff seized wage records, computers and other business records.

"Staff also seized information on employer provided accommodation, rental properties, working for Families Tax credits and payroll matters."

Philp said some of the items removed included information on staff paid in cash without PAYE being deducted and documents detailing cash deposits into private bank accounts without being returned for GST and income tax purposes.

''On unannounced visits we seized till records and lists of staff names and work rosters to check against employee details we hold.''

During the operation, a number of taxpayers referred unprompted to the Thai House case and were aware IR was conducting search activities in Queenstown outside of normal business hours, he said.

Since the operation ended two businesses have indicated they will make voluntary disclosures.

''It's early days yet in the investigations but it's always good to see taxpayers or their agents contacting us early after a compliance visit, wanting to make a voluntary disclosure. It helps the taxpayer as they receive a reduction in the penalties imposed.

''Also, we appreciate that investigations can be stressful, and we work with taxpayers to resolve matters in a timely manner so they can get on with their business.''

Philp said 32 medium to low risk businesses were also visited to be reminded of the 'Sleep Easy' campaign.

''Knowing the books are all in good order takes a huge weight off a business owner's shoulders and means they can sleep easy knowing they have good records.

''We visited more than 30 taxpayers in Arrowtown, Queenstown, and Frankton to talk about our 'Sleep Easy' campaign and left information about record keeping with them. We want to support businesses to keep good records and ensure a level playing field for all.''