St. John’s-based car dealership Cabot Ford Lincoln Sales Ltd and its president, Frank Clarke, were each convicted of tax evasion Friday and ordered to pay a combined total of more than $90,000 in fines.
Clarke and the dealership made a plea deal, pleading guilty to one count each of evading the payment of taxes. Eight other similar charges were withdrawn as a result.
Reading from an agreed statement of facts, Crown prosecutor Bill Howse told the court Clarke’s personal expenses had been claimed on Cabot Ford’s corporate income tax returns between 2009 and 2011.
Auditors with the Canada Revenue Agency (CRA) first reviewed the business’s tax filings in 2011, and in 2014 awarded Clarke and Cabot Ford "gross negligence penalties" totaling $47,000. Clarke paid the penalties at that time.
The CRA began an investigation in the summer of 2015, interviewing prior auditors on the file and conducting a preliminary review of the tax documents, and five months later the case was approved for a full-scale investigation.
Search warrants were executed at the dealership, Clarke’s Paradise home, CRA offices and the office of Cabot Ford’s accountants in February of last year, and records were seized.
"These records included original invoices for personal expenses of Frank Clarke that were claimed on the T2 corporate income tax return of Cabot Ford," Howse read from the statement of facts.
Among those were invoices for $23,730 for driveway paving, shelving in the amount of $9,239, and landscaping to the tune of $70,886.
Tax returns for Cabot Ford were based partly on documents provided to the dealership by Clarke, the statement of facts noted, and many of those documents contained false information.
"Frank Clarke provided those documents to Cabot Ford, knowing they would be used to complete the T2 returns of Cabot Ford as well as his own T1 returns," Howse said.
The CRA’s investigation revealed Clarke had caused the dealership to claim $240,047 in his personal expenses, evading a tax payment of $33,022. Clarke had failed to declare income of $271,252, thereby evading paying $57,193 in taxes.
Provincial court Judge David Orr accepted a joint submission from Howse and defence lawyer David Eaton on sentencing, ordering Clarke and Cabot Ford to pay those exact amounts.
Twitter: @tara_bradbury
