New Zealand Law
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As you realise there is a good chance of jail if he is caught. GST money is regarded as being held on trust for the IRD, so failure to pay or making false returns are taken more seriously than failing to pay income tax. If he makes a voluntary disclosure, they may still prosecute him, but an early admission and cooperation will help avoid a jail sentence. He will also need to be able to repay the refunds and possibly penalties, and if he avoids jail, he will be fined. So he would need to be financially prepared to avoid jail. People sometimes try tax fraud when they are short of money, which is why I mentioned the need to be ready to repay. If they discuss this, the first thing mentioned would be repayment, and if he cannot do so, it would be more likely they will prosecute and ask for jail as the sentence
The voluntary disclosure is where there are errors. A deliberate case of falsifying the records is different, and there would be no certainty about prosecution.
He may be best to hire a lawyer and start the negotiations
Criminal would be best even though this is a tax issue