Cash received income for Director

The Gelderland Court has ruled that Company E distributed profits to its director/ majority shareholder. According to the court, the tax inspector had rightly judged that E had deliberately and incorrectly failed to declare a large amount of cash proceeds from the sale of scrap metal.

Case
A director holds shares in Company E. Company F, a subsidiary of Company E, is in the business of producing metal frames, pressure vessels and equipment. In the years 2001 – 2006 Company E delivered scrap metal to Company G. Company G paid half the proceeds from the sale of the scrap metal out in cash and the other half was paid through the bank. After investigation the inspector uncovered that the cash received by E was not declared as revenue in their accounts.

The inspector is of the opinion that Company E had not recorded the cash as revenue in their accounts deliberately and paid the profits to its director. The inspector corrected the income tax returns for the years 2001 – 2006 and imposed additional tax assessments.

The Gelderland Court has ruled that Company E distributed profits to its director. According to the court, the tax inspector had rightly judged that E had deliberately and incorrectly failed to declare a large amount of cash proceeds from the sale of scrap metal.

The additional assessments for 2001 and 2002 were imposed outside the applicable period and were therefore thrown away by the Court. According to the Court, the inspector could not produce any evidence that X had been granted extra time for the filing of the tax returns.

Source: taxlive.nl, rechtspraak.nl