Tracey Wilson A Southland businesswoman at the centre of a major tax evasion case has left a trail of debt exceeding $2 million after her catering company collapsed, highlighting ongoing challenges in New Zealand’s efforts to curb tax crime and protect public funds.
The Case: Debra Lee Monteith and Lee 19 Limited
Debra Lee Monteith, the sole director and shareholder of Lee 19 Limited (trading as Lee’s Catering), appeared in the Invercargill District Court and was sentenced to 11 months’ home detention for aiding and abetting her company in failing to account for PAYE tax between March 2021 and February 2024. Inland Revenue’s investigation revealed a pattern of non-compliance, misuse of company finances, and disregard for statutory tax obligations.
How the Debt Grew
Lee 19 Limited was primarily involved in food catering, including contracts for the Ministry of Education’s Ka Ora, Ka Ako Healthy School Lunches Programme and the Alliance Lorneville meat processing plant. The company registered as an employer in 2019 and began paying workers, but soon after, employees raised concerns that their KiwiSaver deductions were not being paid.
No PAYE returns were filed until 2020, when seven periods’ worth of returns were submitted at once, immediately incurring over $82,000 in tax liabilities. Monteith entered an instalment arrangement in 2020, but it was cancelled in 2022 due to missed payments. From March 2021 until February 2024, the company ceased paying PAYE altogether, with unpaid PAYE over this period totaling more than $800,000.
Monteith admitted to Inland Revenue that the withheld PAYE was used to keep the business afloat and pay for food costs. She also used company funds for personal expenses, including groceries, and benefited by over $300,000 between 2020 and 2024, despite not drawing a salary.
Liquidation and Asset Recovery
In March 2024, Lee 19 Limited was placed into liquidation. The company’s assets were valued at just under $100,000, while its liabilities ballooned to more than $2 million. Inland Revenue was listed as a preferential creditor, owed over $1.1 million, with unsecured creditors owed $843,336 and secured creditors owed $181,482.
The liquidators’ report revealed further complications:
- The company had been used to operate a lawnmowing business belonging to Monteith’s ex-partner, with contracts continuing even after liquidation.
- Attempts to recover assets or pursue claims against third parties and overdrawn accounts were largely unsuccessful due to lack of response or inability to locate individuals.
- All remaining company assets were ultimately sold to a single party.
Covid-19 Support and Public Funds
Lee 19 Limited also received more than $780,000 in Covid-19 support from various government schemes. Despite this significant taxpayer support, the company continued to default on its tax obligations, exacerbating the eventual debt burden.
Monteith’s Business History
Monteith’s case is not her first brush with financial trouble. She has run four other companies since the late 1980s and was declared bankrupt in 2013. The pattern of business mismanagement and disregard for statutory obligations was a key factor in the court’s decision.
Inland Revenue’s Response
Inland Revenue applied to put Monteith into liquidation last year, which was granted. Officials underscored the seriousness of the case, noting that the company was receiving taxpayer support while failing to meet its own tax responsibilities. The department continues to increase compliance and enforcement efforts, targeting sectors and individuals with outstanding or undeclared tax liabilities.
Summary
The collapse of Lee 19 Limited and the sentencing of Debra Lee Monteith for tax evasion have left a $2 million trail of debt, with significant sums owed to Inland Revenue and other creditors. The case highlights the risks posed by non-compliant businesses, the importance of robust enforcement, and the ongoing need for vigilance in the use of public funds and support schemes.
