Multimillionaire calls CRA negligent, wants $4.8M tax bill thrown out

A British Canadian money manager who's been at odds with the Canada Revenue Agency for more than a decade wants a judge to toss out a nearly $5 million bill for back taxes, saying the CRA never sent it to him and now it's too late.

Whether Charles Shaker, 44, has to pay up may hinge on the proficiency of the CRA's mail department.

An auditor concluded in March 2017 that the former Ottawa-area resident owed $3.8 million in extra taxes for 2008 and 2009, according to court records, based on calculations that he had derived millions of dollars in undeclared personal benefits like car and condo fee payments from a financial planning and consulting company he owned. With penalties and interest, the amount has grown to $4.8 million.

But in addition to disputing those numbers, Shaker alleges the CRA omitted a basic step: It never properly sent him notice that it had reassessed him, or any indication of the amount it wanted him to pay. He's contesting the bill in Tax Court, asking a judge to set it aside.

"The CRA has proffered no evidence that it gave Mr. Shaker any notice whatsoever of the alleged tax debt," his lawyers wrote in a separate but related proceeding last year.

"The CRA is legally required to provide the debtor with proper notice…. Accordingly, there is not, and never has been, any valid tax debt owed by Mr. Shaker."

The CRA wouldn't comment directly on its dispute with Shaker, citing the ongoing court case and taxpayer privacy. It hasn't yet filed its response in Tax Court and has obtained three extensions to the normal deadline.  

CBC News emailed Shaker and his tax lawyer Jeff Pniowsky last month and earlier this month requesting comment. Criminal defence lawyer Brian Greenspan replied a week later — saying he'd "been requested to respond" — and that Shaker "vigorously and unequivocally denies any suggestion of impropriety or wrongdoing and will take appropriate action with respect to any renewed attempt to tarnish his reputation by an innuendo of suspicion."

The CRA does indeed have to send a notice of assessment or reassessment — within required time frames — before it can start trying to collect on any debt, says David Rotfleisch, a Toronto accountant and tax lawyer who isn't involved in the litigation.

"The CRA has the onus of proving, 'Yeah, we sent it,'" he said. "It's not a hard onus. They just have to show that someone mailed it," to the most recent address that the taxpayer provided. 

Otherwise, "the CRA is out of luck."

Shaker appears to have landed on the CRA's radar in 2010 largely because his name was on a leaked list of 130,000 people and entities with ties to confidential accounts at HSBC's private bank in Geneva, according to court records from an earlier case. 

A CBC News investigation last year found records in a number of tax-haven data leaks showing he at one point owned or was a director of several offshore companies in the British Virgin Islands and Barbados. 

After the CRA spent more than five years looking into his dealings, it issued a notice of reassessment to Shaker on March 31, 2017, a tax officer says in a sworn statement filed in one of his earlier court cases.