By Steve Hepburn of 
Photo: ODT
A tax-evading Southland school caterer has left a $2 million trail of debt after her company went bust.
Debra Lee Monteith appeared in the Invercargill District Court on Tuesday and was sentenced to 11 months' home detention on a single representative charge of aiding and abetting her company in failing to account for PAYE between March 2021 and February 2024, Inland Revenue said in a release.
That just added to her troubles after her company, Lee 19, was put into liquidation in March last year, with questions over third-party loans and operating a lawnmowing business under the company's name, which was running contracts while in liquidation.
Her company stopped paying PAYE tax for nearly three years and defaulted on a debt repayment scheme.
Inland Revenue had applied to put her in liquidation last year, which was granted. All up, the company had assets of $99,899 and liabilities of $2,048,785.
Lee 19 was primarily involved in food catering, including the Ministry of Education's Ka Ora, Ka Ako Healthy School Lunches Programme and catering at the Alliance Lorneville meat processing plant.
The latest liquidators' report said Inland Revenue was one of the preferential creditors, who were collectively owed $1,106,877, unsecured creditors were owed $843,336, while secured creditors were owed $181,482.
In the latest liquidators report, published in April this year, the director of the company advised the company was operating two businesses: a catering business and a canteen. The director also advised the company had been used to operate her ex-partner's lawnmowing business.
Initially, the director advised of an intention to purchase some of the company's assets. Due to the valuations the liquidators received, those purchases were declined by the liquidators.
All remaining company assets were sold to one party.
The liquidators were also considering a claim for an unrelated third party which had a contract with the lawnmowing business in the name of the company. The contract was still operating after the liquidation, with questions about who was receiving payments.
A claim was also issued for an overdrawn current account against the previous director. No response was received. A claim was also made on a third-party loan but no-one could be located and it became uneconomic to pursue.
Inland Revenue said in its statement that in 2019, Lee 19 registered as an employer and began paying its workers. The next year, several employees phoned Inland Revenue stating their KiwiSaver deductions were not being paid.
No PAYE returns were filed until 2020, when returns for seven PAYE periods were made all at once with $82,894.86 (excluding penalties and interest) immediately due and payable. Monteith entered into an instalment arrangement in 2020 for the debt, but this was cancelled in 2022 because of missed payments.
Then the company stopped paying PAYE entirely from March 2021 until February 2024. The PAYE not accounted for over the period totalled $801,928.79.
Monteith told Inland Revenue the PAYE was used to keep the company afloat and pay for food costs. Her personal expenses were paid out of the company's finances and her groceries were taken from the company's pantry.
Monteith benefited by just over $300,000 between 2020 and 2024, although she was not otherwise taking a salary from the company.
Lee 19 also applied for and received more than $780,000 in Covid-19 support money from various schemes.
The company, at Monteith's direction, was receiving significant taxpayer support while at the same time not meeting its own tax obligations.
Monteith, who ran four other companies since the late 1980s, was made bankrupt in 2013.
