Introduction:
Receiving a tax assessment from the Federal Inland Revenue Service (FIRS) in Nigeria can be a daunting experience for individuals and businesses. A tax assessment is an official notice from the tax authority that outlines the amount of tax it believes you owe. However, it is important to remember that assessments are not set in stone, and taxpayers have the right to respond, challenge and seek resolution. In this article, we will provide valuable tips on how to handle FIRS tax assessments effectively.
Understanding FIRS Tax Assessments:
A tax assessment is typically issued when FIRS believes there may be discrepancies in your tax returns or that you may owe additional taxes. Assessments can cover various taxes, including income tax, value-added tax (VAT), and withholding tax among others. It is essential to act promptly and professionally when you receive an assessment to protect your rights and financial interests.
Tips for Responding to FIRS Tax Assessments:
- Review the Assessment Thoroughly: Carefully examine the assessment notice, paying close attention to the details, calculations and the period covered. Ensure it aligns with your records and understand the basis for the assessment.
- Seek Professional Advice: Engage tax professionals or accounting firms with expertise in Nigerian tax laws. They can provide guidance on the accuracy of the assessment and recommend the most suitable course of action.
- Gather Supporting Documentation: Collect all relevant documentation, records, and evidence that substantiates your tax position. Having complete and organized documentation is crucial for a successful response.
- Communicate with FIRS: Open lines of communication with FIRS to address any questions or concerns. In some cases, discrepancies may be due to clerical errors or misunderstandings that can be resolved through communication.
- Submit a Formal Response: Prepare a formal response to the assessment, outlining your position and providing supporting documentation. Your response should be clear, concise and respectful.
Challenging FIRS Tax Assessments:
If you believe the assessment is incorrect, you have the right to challenge it. Here’s how:
- File an Objection: You can file a formal objection with FIRS, explaining why you disagree with the assessment. Provide evidence and arguments to support your case. FIRS will review your objection and may adjust the assessment accordingly.
- Appeal to the Tax Appeal Tribunal: If you are dissatisfied with FIRS’ response to your objection, you can appeal to the Tax Appeal Tribunal (TAT). TAT is an independent body that reviews tax disputes. Prepare a strong case with legal representation to present to the tribunal.
- Seek Alternative Dispute Resolution (ADR): FIRS offers ADR as an option for resolving tax disputes. ADR involves negotiation and mediation to reach a mutually acceptable agreement, potentially avoiding lengthy legal proceedings.
Key Considerations:
- Timeliness: Respond to assessments promptly to avoid penalties and interest on outstanding tax liabilities.
- Professional Representation: Consider legal representation or tax professionals when challenging assessments, especially if the dispute is complex.
- Documentation: Maintain detailed records of all correspondence and interactions with FIRS throughout the assessment and dispute resolution process.
Conclusion:
Handling FIRS tax assessments can be a challenging but manageable process. It is essential to respond promptly, seek professional advice, and provide comprehensive documentation to support your tax position. If you disagree with the assessment, you have the right to challenge it through formal objection, appeal, or alternative dispute resolution methods. By following these tips and acting prudently, individuals and businesses can effectively navigate the assessment and dispute resolution process, ensuring fair and accurate tax assessments in line with Nigerian tax laws.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.
