ACC Fails to Implement the Will of Parliament Continued

By Alex Taylor

In my previous article I promised that I would provide more information how the Accident Compensation Corporation is running unlawful processes that deny levy paying self-employed persons their lawful entitlements under Schedule 1 Clause 38 (2)(a) and Clause 39 (2)(a).

In my previous article I identified how the Corporation has placed a false test on Clause 38 and 39 (2)(a) claimants. The Corporation’s stated position in OIA documents is that the claimant must be in their first year of self-employment which is a position completely at odds with the clear rulings provided in the Bartrom appeals and the wording in Section 169A of the legislation.

In this article I will demonstrate that matters go much deeper than that. Not only does the Corporation rely upon its unlawful first year in self-employment test to defeat entitlement at a macro level, it also relies upon a series of unlawful processes to defeat these claims at an individual level.

The claimants directly affected are self-employed persons who pay Schedular Tax PAYE payments to IRD. IRD treats those Schedular tax payers as PAYE employees. IRD is increasing the types of workers who will be paying Schedular tax, thus creating an ever-increasing number of claimants who will essentially be ripped off by ACC.

Schedular tax payments are unique in that during the period the tax payer is receiving those payments, IRD treat those payments as PAYE. However, at the end of the tax year Schedular PAYE tax payers are entitled to deduct expenses as if those PAYE earnings were received as a self-employed person. Once those expenses are deducted the final earnings are presented as earnings as a self-employed person in what is now the previous financial year when the tax year rolls over on April the 1st.

Essentially the earnings are treated under the PAYE regime in the current tax year so IRD can tax the self-employed as they earn. But as the tax payer is self-employed, unlike the permanent PAYE employee, deductions for expenses can be calculated. Essentially the tax status of the self-employed person required to make Schedular PAYE tax payments is transitional. In the tax year in which the Schedular payments are made the earnings are treated as PAYE that take on the status of earnings received as a self-employed person after expenses have been deducted when the financial year rolls over.

It is here we examine the next unlawful process that the Corporation is conducting. Let us take a claimant who actually is in their first year of self-employment so we can focus on this specific issue. Our claimant started their business on April the 2nd 2017. They were paid a Schedular payment of say $8000 dollars on the 28th of April and then had an accident on April the 29th 2017.

The Date of First Incapacity is strictly interpreted and in this case, is April 29th, 2017. Now as this claimant is in their first year of self-employment it is not possible for the claimant to have any earnings received as a self-employed person under law due to the absence of any previous financial years. This is where the Corporation steps in and implements its next wholly unlawful process.

At the time of the DOFI (Date of First Incapacity) the tax records will show the payment on the 28th of April 2017 as a Schedular PAYE payment. The Tax document will specifically state that those earnings are not considered as earnings received from self-employed income as at this stage IRD are treating the earnings as PAYE so that IRD can tax the self-employed as they earn.

The Corporation alters the tax status of the earnings on the DOFI from earnings received as an employee (PAYE) to earnings received as a self-employed person (Relevant Year). Earnings received as a self-employed person can only be calculated in the previous relevant year but wait. Our claimant is in their first year of self-employment so there can be no previous relevant financial year. This results in the following decision from the Corporation.

ACC has identified you had earnings immediately before incapacity so you are eligible for a calculation under Clause 38. The earnings you received are earnings received as a self-employed person and those earnings can only be calculated in the relevant year. As you have no earnings in the relevant year you are entitled to 80% of Nil. This requires ACC to calculate your entitlement under Clause 42. (More on that later)

To add insult to injury the claimant who has been unlawfully denied entitlement, despite the presence of PAYE schedular payments which have been altered by ACC, will then receive a fat levy bill in the following financial year due to the presence of the PAYE earnings the Corporation has avoided liability on at entitlement level.

If we examine the Corporation’s decision to calculate 80% of Nil earnings it is evident that there is something very wrong. A calculation where zero is divided is a calculation that sits outside of the laws of accounting and mathematics. It is simply not possible to conduct such a calculation and yet here we are where ACC does this as a matter of course. This is the direct result of ACC unlawfully changing the earnings status of the claimant at the DOFI.

When it comes to Clause 42, ACC presents this as a possibility to the claimant and then goes on to claim the claimant was not in full time employment or would not have continued to be in full time self-employment. The Corporation does not concern itself with proof. Corporation staff have proven themselves willing to say anything to achieve this objective. (More on that in my next article)

In summary the Corporation not only has placed the unlawful first year of self-employment test on the process, the Corporation wilfully alters the tax status of the claimant’s earnings from what is recorded at IRD as PAYE earnings on the DOFI to earnings received as self-employed person. Combine these facts with the fact that ACC has no audit process for Clause 38 and 39 (2)(a) claimants and the fact there has been no case law on Clause 38 (2)(a) in twelve years and the picture is very clear.

ACC has implemented procedures to defeat entitlement claims for self-employed schedular tax payers resulting in decisions that do not conform with the laws of mathematics, computing and accounting. Once the claimant has been unlawfully diverted to Clause 42 the Corporation attacks the claimant’s veracity in the absence of proof and in the presence of the willingness of ACC staff to bear false witness against those who cannot defend themselves.

I can now confirm without any doubt that the Corporation’s Executive is very aware of the concerns I have raised. The Executive is comfortable with the processes and have no intention of altering the processes in any way whatsoever. This confirms that the Corporation has always wilfully run those processes, and will continue to do so unless it is stopped.

I will be continuing the battle to hold ACC accountable but the public need to know now. There are more articles to follow.

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