FORMER CL Financial executive Andre Monteil has lost his final appeal at the Privy Council regarding a disputed income tax assessment exceeding $20 million.
The decision, delivered by Lord Hodge on Thursday, concludes a protracted legal battle related to Monteil’s 2007/2008 income tax return and highlights significant tax implications for both employees and employers.
Monteil plans to approach the Board of Inland Revenue (BIR) to discuss a repayment plan for the outstanding taxes, local media is reporting.
The dispute emerged when the BIR audited Monteil’s declared income, initially listed as just his employment salary, and found discrepancies indicating a much higher actual income. Consequently, on October 1, 2012, the BIR assessed additional tax liabilities, holding Monteil accountable for the shortfall.
Monteil’s defence centered on the Pay-As-You-Earn (PAYE) system, arguing that it placed responsibility for tax remittance on his employer, thus absolving him of liability.
However, this argument was rejected by the courts. The Tax Appeal Board, Court of Appeal, and Privy Council all upheld that PAYE is merely a collection mechanism and does not relieve employees of their ultimate tax responsibilities.
Key points from the Privy Council’s decision include:
- Employee Responsibility: Employees are ultimately responsible for their taxes, despite PAYE deductions by employers.
- BIR Authority: The BIR can issue additional assessments for unpaid taxes, irrespective of PAYE compliance.
- PAYE Limitations: PAYE is not the sole method for tax recovery; employees remain liable for any shortfall.
- Employer Penalties: Employer penalties for failing to remit taxes do not eliminate employee accountability.
