Eric Watson's Cullen Group Could Face Years of Court Battles Over Multimillion Tax Judgment

Beleaguered rich-lister Eric Watson will likely remain embroiled in courts for years — and faces the possibility of a tax bill of $200m when penalties are added — after a landmark court decision yesterday saw his businesses ruled to have engaged in $51.5m in tax avoidance, The New Zealand Herald reported. Justice Matthew Palmer said a complex 2002 transaction — involving Cayman Island companies while Watson himself was relocating from New Zealand to the UK for tax purposes — was an avoidance arrangement. The case is one of the largest tax judgments in New Zealand history. Watson's Cullen Group was ruled liable for $51.5m in back taxes, plus interest and penalties. During a three-week trial last year the court heard Inland Revenue considered interest costs alone amounted to $60.5m. Penalties were yet to be quantified, Palmer said. Tax consultant Terry Baucher said Inland Revenue had the ability to impose up to 100 per cent penalties if it decided the tax position was "abusive", raising the prospect of a tax bill exceeding $200m. Read more