Directors’ Use Of Company Cars and Tax Compliance Appeal

KRA conducted a tax audit (2017–2021) and issued assessments for Corporation Tax, VAT, and PAYE, totaling Kshs. 84,389,640, including penalties and interest. NCL objected, but KRA upheld the assessments, leading to this appeal.

In this article we will dwell  on  PAYE only.

KRA imposed PAYE on motor vehicle benefits for two company cars (Toyota Station Wagons) registered under the company but allegedly used by directors.

NCL arguments:

• The two station wagons were solely for delivering goods to customers.
• NCL Submitted work tickets (delivery logs) as evidence.
• Vehicles were parked at company premises after business hours.
• Directors never used the cars privately; no personal trips were recorded.
• KRA’s assessment was based on presumption, not proof.

KRA’s arguments:

• Station wagons are typically personal-use vehicles (not commercial trucks).
• NCL failed to provide work tickets during the objection stage (only submitted them later in the appeal).
• Without contemporaneous logs (e.g., daily mileage records), KRA’s assessment stood

Tribunal’s Findings:

• NCL failed to provide sufficient documentation (e.g., work tickets for vehicles) to counter the Respondent’s assessments, per Section 30 of the Tax Appeals Tribunal Act.
• Work Tickets Were Submitted Late (only during the appeal, not in the objection process).

As such NCL lost