TAX SERVICES

HMRC’s attempts to claw back taxes from people who used tax-planning schemes that they thought were legal have caused “widespread anxiety and distrust”, MPs have warned. MPs have previously claimed that the “loan charge” introduced to recover taxes on income that had effectively been disguised as loans has driven several people to take their own lives. About 50,000 people are thought to have used schemes, often on the advice of their employer or a financial adviser, to route their money into a trust that then paid them a salary in the form of a loan that was never designed to be repaid. Because the money was described as a loan it was not subject to income tax. After a crackdown, many have been left with bills for income tax covering up to two decades of their earnings. HMRC has now clarified that it will not force people to sell their homes or make them bankrupt to pay back taxes under the loan charge.A new report by the Treasury Sub-Committee published on Wednesday found that collecting the tax was the correct approach but that the way HMRC had gone about it caused unnecessary stress. The committee said HMRC should give vulnerable taxpayers involved in tax disputes better guidance about the law and more support to understand their rights. Former Brexit secretary David Davis claimed earlier this month that four suicides had been linked to the way HMRC has dealt with chasing unpaid taxes relating to the loan charge. Mr Davis urged the Treasury to consider people’s mental health when implementing the policy. HMRC said it would allow people who are facing large bills under the loan charge to put in place affordable repayment plans. John Mann, chair of the Treasury Sub-Committee, said HMRC needs to do more to protect vulnerable taxpayers. The Labour MP added: “One of HMRC’s key responsibilities, as required by parliament, is to protect public funds from tax avoidance.Watch more  “As such, HMRC introduced the loan charge to tackle the use of disguised remuneration schemes, which it describes as an anti-tax avoidance measure. “Setting aside the policy, HMRC’s administrative approach to the payment of large unexpected tax bills has been sensible. “The delay, however, in clarifying payment terms for those wanting to settle their past use of such schemes has caused widespread anxiety and distrust. “HMRC’s measures to improve its approach to vulnerable taxpayers are welcome, but it must urgently improve the guidance available for those involved in tax disputes.” The loan charge came into effect earlier this year to tackle the use of so-called disguised remuneration schemes. All loans made under such schemes since April 1999 that are still outstanding in April 2019 are now taxed as income.   Source: Independent

Rauf Aregbesola, a former governor of Osun state, has revealed his plans for rich Nigeria if he eventually becomes a minster – Aregbesola, speaking at the Senate screening as a ministerial nominee on Monday, July 29, said that he will impose heavy taxes on wealthy citizens in the country. The former Osun governor said that this move will help to lift the tax burden on small businesses in Nigeria A former governor of Osun state, Rauf Aregbesola, on Monday, July 29, said that if he is made a minister, he will impose heavy taxes on rich Nigerians. Aregbesola, who is a ministerial nominee for President Muhammadu Buhari’s second cabinet, said this as he was responding to questions from Senator Theodore Orji (Abia central) during the screening at the Senate on Monday, The Cable reports. The former Osun state governor said that the present taxation system does not pay much attention to the rich men in the country, and as such allowing them to abandon their responsibility to other citizens. He said that the taxes from wealthy Nigerians would lift the burden on small businesses in the country. Aregbesola said: “So, I am going to pioneer privilege taxes for those who have huge resources or wealth from which Nigerians must tap. “If I go into this, there might be some ill feelings in some quarters, so I won’t go deep into that. I will recommend serious taxation for wealthy people in Nigeria.” Earlier, Legit.ng reported that Aregbesola said on Monday that rumours of owed salaries in Osun during his tenure was due to mischief and ignorance. Aregbesola made this known during his turn for ministerial screening and confirmation before the Senate.   Source: Legit

The Chairman, Akwa Ibom State Internal Revenue Service, Mr Okon Okon, has said the service will not spare any company, individual or agency found defaulting in payment of tax to the state government. He said anyone found defaulting in payment of tax would be prosecuted according applicable tax laws. Okon, who stated the new position at a post-board briefing in Uyo, the state capital, said the agency was currently embarking on enforcement and recovery drive throughout the state. Okon said, “We will not hesitate to prosecute any tax defaulter in line with applicable tax laws. “The service is currently embarking on major reinforcement and recovery drive. I, therefore, urge tax defaulters to honour their civic obligations by paying their taxes promptly to avoid being prosecuted in line with the applicable tax laws.” He said even though the service had made appreciable success over the years with a record of N20bn halfway into 2019, it was not going to relax.   Source: Punch

As a means of fighting tax evasion, the Kenya Revenue Authority (KRA) has announced plans to install Electronic Tax Registers (ERTs) at business establishments in the country. The ETRs will grant KRA real-time access to invoices issued by traders around the country. By law, businesses with an annual turnover of at least Sh5 million will be required to get this electronic tax register. Traders, manufacturers, and suppliers will also be required to install the new Internet-enabled ETRs which allow the taxman track business conducts using invoices of every transaction and assess the tax due on a real-time basis. The planned deployment has the legal backing of VAT Act 2013, a law which prohibits the use of hard copy cash sale receipts and invoices. To ensure compliance, the system will require traders to seek permission before performing any business the next day. This means incorrect or incomplete data logged in the previous day could lock them out. More so, control units are required to send end-of-day summary after all the invoices for the respective day have been transmitted and before starting invoice transmission for the next day. Once the new device is out, however, manufacturers are expected to bear the cost of compliance and procurement. Traders and manufacturers may as well choose to pass it to the customers.  On the aspect of procurement cost, Nikhil Hira, a tax expert and director at law firm Bowman’s Kenya said, “I assume that once the machines have been sourced, taxpayers will be told to purchase and start using them – of course, this means additional cost for taxpayers.”  KRA has consistently missed its targeted annual growth in tax returns for reasons being tax-related misconduct such as theft, cheating in the declaration of return, corruption, collusion and soliciting bribes from tax cheats. The agency, under the newly appointed Commissioner-General James Mburu, is expected by the Treasury to collect Sh1.87 trillion in taxes in the current financial year, up from the Sh1.65 trillion it was expected to rise in the just-ended financial year. The government of Kenya has over the years tried to restrain tax evasion by implementing different systems ranging from the Integrated Customs Management System (iCMS) to the Simba System and now, the ETR. Recently, seventy-five KRA staffs were arrested and detained in a tax evasion scandal. In April 2018, KRA got a businessman arrested in a sophisticated tax evasion case ever witnessed in the country. He was charged with counts relating to evading payment of about Sh7 billion in value-added tax (VAT) and income taxes. In November last year, President Uhuru Kenyatta directed the KRA to use the Sh3 billion Huduma Namba (a new National Integrated Identity Management System) biometric data to catch tax cheats. With this new system coming into play, KRA can monitor businesses incomes and businesspersons will not be able to reduce their tax liability without being noticed. This will allow the government to put taxes generated into public service development. Improving tax revenue has always been a top issue on the agenda of most African governments. In March 2019, the Nigerian government introduced new taxes in a bid to increase the revenue of the country. Also, the Togo Revenue Authority (OTR) is the first in the 14-member CFA franc zone to unify national tax and customs services. Since it was created in 2014, the OTR has successfully streamlined both processes and cut staff numbers by 17 percent. Togo saw tax proceeds increase by 23 percent the year after the OTR was created.   Source: Ventures Africa

The Federal Inland Revenue Service (FIRS) and the Tertiary Education Trust Fund (TETFund), have concluded plans to generate more funds through the education tax collection from non-oil sector to finance tertiary institutions and their various projects. TETfund’ Executive Secretary, Suleiman Bogoro, speaking at an interactive forum for stakeholders, themed: “Mitigating the Challenges of Education Tax Collection in a Recuperating Economy”, Bogoro noted that FIRS is making considerable efforts to grow taxes from the non-oil sector, while it looks forward to an increase in Education Tax from the present two per cent to four per cent of Assessable Profits. He said an increase in tax collection would translate to more funds to finance institutions’ projects, thereby improving education quality.“State governments, who establish most of the institutions, abandoned their funding, particularly in the area of capital projects to TETFund. This has to some extent reduced our impact in funding the education sector,” he said.  The Chairman, FIRS, Dr. Tunde Fowler, represented by Special Assistant, Mr. Aina Abiodun, said tax payment is important and everyone should pay for a better Nigeria.   Source: Punch

Failure of Midwestern Oil and Gas Company Limited to pay the outstanding tax liability due to the Federal Republic of Nigeria in the sum of $97,086,985.00.has prompted the Federal Inland Revenue Service to drag the company before a Federal high court in Lagos south west Nigeria. In an affidavit sworn to by Mr Ayodeji Jolaoso, a legal practitioner from the law firm of DAC legal practitioners, and filed before the court by Barrister Dapo Akinosun, the deponent averred that, as normal obligatory routine, Mid Midwestern Oil and Gas company filed its assessment notice for the year 2012-2013 which was delivered to the Plaintiffs showing that it made profit of $271.9 million and $173.6 million in the two years Federal Inland Revenue Service (FIRS) verified the company’s claim in its self assessment and discovered that the defendant did not pay any amount as its Petroleum Tax and Educational Tax for the year 2012 and 2013 respectively. FIRS thereafter assessed the company based on its declared profit for the year 2012 and 2013. It issued and served a notice of assessment dated 29th January, 2015 and demand notice 11th April, 2018.indicating the outstanding tax liability of the company covering Petroleum tax and educational tax. The break down of the outstanding tax liability of the company are as follows 1. Petroleum profit tax liability for the year 2012 is $65,065,644.00 2.Petroleum profit tax liability for year 2013 is $28,024,364. iii Education tax liability for year 2012 is $2,436,340. iv Education tax liability for year 2013 is $1,565,638.00 The total amount of the outstanding tax liability of the company due to the Government of the Federation from the taxes stated above is $97.086,985.00 The company did not raise any formal objection to the assessment and has since refused to pay the outstanding debt. The Plaintiff instructed its solicitor who wrote a letter further reminding the company of the demand for remittance of the outstanding tax liability. In attempt to settle this matter amicably, the plaintiff’s solicitor also invited the defendant to a meeting to discuss the payment of the outstanding tax liabilities highlighted above and other issues arising therefrom by a letter dated 19thSeptember,2018. The defendant has refused and neglected to pay its outstanding tax liabilities as assessed by the plaintiff despite all attempts made by the FIRS to ensure the remittance of the company’s Petroleum Profit Tax and Education Tax for the years for the years 2012 and 2013. Consequently, the FIRS,is urging the court to direct Midwestern Oil to pay its outstanding tax liability arising from the Petroleum profit tax, and Education tax assessed in the sum of $97,086,985.00. FIRS is also praying the court to direct the company to pay penalty of N10,000.00 daily as consequence of late payment of the tax due from 1st February, 2015.till the date its tax liabilities are remitted as prescribed by section 51(1) of the Petroleum. Profit Tax Act (PPTA) cap P13,Law of the Federation 2004 and Education Tax Act. CapE4,Law of the Federation of Nigeria 2004. Midwestern Oil and Gas Company has not file any defence. meanwhile the case has been adjourned till after court vacation for hearing.   Source: the news