Lack of sales records leaves company with Sh420 million tax bill

KRA offices at Times Tower, Nairobi. [File, Standard]

The Kenya Revenue Authority (KRA) has received the nod to claim Sh420 million in taxes from a company.

This is after the taxman convinced Justice Ann Ong'injo that Bildin Company Limited owed it Sh420 million in taxes between 2016 and 2019.

KRA said the amount was on account of undeclared sales.

Bildin had filed an objection to the demand at the tax tribunal that found that they did not table enough evidence to convince them to overturn it.

Justice Ong'injo said the firm ought to have tabled documents to assist KRA in assessing their tax liabilities.

"The tribunal also found that under Section 30 of the Tax Appeal Tribunal Act, 2013 that the appellant (Bildin) had the burden of proving that the assessment was excessive," she said.

The tribunal in their ruling found that Bildin had not kept records of their transactions and KRA relied on information in their custody to come up with the tax bill.

The Judge noted that the taxman used bank deposits to arrive at the figure.

After being presented with the tax bill, Bildin raised issues with the manner in which the taxman arrived at the figure.

The firm's lawyer argued that KRA's objection decision at the tribunal was outside the required 60 days, noting that during the time the taxman did not inform them whether Bildin's objection was incomplete or improperly lodged.

He said that there was no evidence to show that the respondent requested information from Bildin within the 60 days.

The company said that the assessment was unreasonable, illogical, excessive and oppressive adding that their supporting documents were not considered by the taxman.

KRA's lawyer argued that Section 32 of the Finance Act 2019 had Section 51 (11) (b) gives KRA to make an objection within 60 days after receiving further information from a taxpayer.

He said that tax collector had 60 days to file an objection from July 14, 2021 when Bildin filed their objection.

The lawyer told court that the last information the company provided to KRA was in a February 16, 2022, and KRA had 60 days from the date to raise objections which they did within five days.

According to KRA's lawyer, Bildin admitted that they were not keeping books or records as required and did not prove and claim any expenses incurred.

Among the issues that the tribunal ruled against Bildin was whether KRA's reliance on their bank deposits and alternative information was correct, to which they noted that they failed to provide information to KRA.