- March 18, 2024
- Posted by: admin
- Category: Uncategorized
Can unaudited tax Credits be utilized against pending tax liabilities?
Case Study: Profresh Limited VS KRA
On 16/02/2018, KRA issued a demand letter for self-assessed PAYE and VAT amounting to KES 1.5m and 3.8m, respectively.
On 11/09/2018, KRA issued an agency notice to the taxpayer’s bankers (Guardian Bank and CFC).
On 19/09/2018, the taxpayer requested KRA to lift the agency notice and proposed a payment plan as below:
KES 1,300,000 immediately
KES 1,200,000 on 30/10/2018
KES 1,332,079 on 30/11/2018
On 06/02/2019, KRA issued another agency notice to I&M Bank, Diamond Trust, KCB, and Paramount
On 27/06/2019, KRA issued another demand letter of KES 4.4m PAYE arrears, penalties, and interest.
On 27/06/2019, KRA issued a warrant of distress, and auctioneers visited taxpayer’s business premises and proclaimed various assets
On 05/07/2019, the taxpayer filed a notice of motion with the Tax Appeal Tribunal seeking to restrain KRA from proceeding with the auction of their assets.
The taxpayer submitted that the said assets ie Vehicles and furniture, belonged to another company by the name Balaji Flowers
The taxpayer also submitted that KRA owed them KES 8,005,340 in VAT refunds of which had been outstanding for long.
KRA responded that the said VAT refunds had not been subjected to audit as required
KRA averred that the taxpayer had already admitted that he owed KRA through self-assessment. Secondly, PAYE is normally deducted from employees, and therefore, employers only hold it in trust
The tribunal noted that the taxpayer did not challenge the existence of the debt.
The tribunal also noted that Balaji Flowers and the taxpayer shared the same offices, directors, and employees .Secondly, Balaji flowers did not object to the distress notice.
The tribunal ruled that KRA was within the law to auction the taxpayer’s assets.
The interim orders issued on 12/07/2019 and 23/09/2019 were therefore vacated on 28/02/2020
https://hisibati-consulting.co.ke/
Can unaudited tax Credits be utilized against pending tax liabilities?
