Oluchi Onah

 6 August 2021 TIN:- The Tax Controller Enugu Micro and Small Tax office Federal Inland Revenue Service (“FIRS”) 7, Ridgeway road GRA, Enugu Enugu State. Dear Sir, Objections to Desk Examination Assessment of N19,962,530.02 for- accounting years re: Company income Tax Act CAP C21 LFN 2004(as amended), Value Added Tax Act CAP VI LFN, 2004 (as amended), Federal Inland Revenue Services (Establishment) Act, 2007, Finance Act, 2019.Desk Examination-Annual tax return:- Accounting Years. We refer to your letter dated 13 July 2021 with reference number ENU/MSTO/RPPU/-/2021/01 (the “Desk review assessment letter”) received by Ingrace Multiple Concept Limited (“our company”) by the Desk review assessment letter, FIRS notified our company of the review of our company’ 2018 to 2020 tax return and raised a VAT and WHT tax liability issues for which FIRS required our company to respond to within 30 days of receipt or remit same to FIRS. The company’s management and tax consultant have reviewed your desk review assessment letter and object the assessment therein based on the following grounds; 1. Annual Revenue and VAT Payable FIRS failed to include all our VAT remittances for 2018 to 2020 accounting year in arriving at the VAT payable in it’ desk review assessment letter. Please find attached as appendix 1 additional VAT remittances made by our company within the years under consideration excluded by FIRS in computation of the VAT Payable and update our records accordingly. 2. Disallowable Deductions While FIRS had indicated its intention to disallow our expenses on public relation and General office expenses due to it generality in nature, please find below the actual breakdown of the General office expenses which are wholly, exclusively, reasonably and necessary for our operation and therefore request the FIRS to consider the expenses as allowable further to the specific breakdown provided. Specific Particulars- 3. Staff Cost As requested, please find attached attached our company payroll and monthly PAYE tax remittance receipts for 2018 to 2020 tax years for your review and considerations. 4. Product and services that are liable to WHT and VAT The rent/lease, audit and accountancy fees, and repairs & maintenance, listed by FIRS as liable to WHT relates to vendors who are individuals, partnership and non-corporate entities, hence WHT due therefrom are not administered by FIRS but relevant State authorities. please find attached as appendix 3 for your ease of reference tenancy agreement with our landlord, and invoices from our auditors and repairs vendor indicating that these are not corporate entities. While we are aware that the said listed expenses are liable to VAT, we have paid over the VAT to the relevant vendor and the law do not place the obligation to account for the VAT arising on our vendors on us, even though the tax burden is placed on our company. Please also see attached the invoices from our vendors in which we have paid over VAT on. 5. Imposition of Penalty and interest Section 77(3) and (2) of the Company Income Tax Act, (the “CITA) provides that: Subject to provision of subsection (3) of section 74 of this Act, Collection of tax in any case where notice of objection or an appeal has been given by the company shall remain in abeyance until such objection or appeal is determined, save that the company shall have paid the provisional tax as provided in subsection (1) of this section or the tax not disputed, whichever is higher.” The foregoing provisions clearly indicate that a tax assessment becomes final and conclusive where no valid objection or appeal has been lodged within the time limit prescribed by law. It therefore follows that where a valid objection or appeal has been raised within the specified time limit, the assessment cannot be deemed to have become final and conclusive. We submit that where an assessment has not become final and conclusive, penalty and interest cannot be levied against the taxpayer. It was held in Tetra Park West Africa Limited v Federal Inland Revenue Service (2016) 21 TLRN 95 that penalty and interest begin to accrue only when the additional assessments have become final and conclusive. In that case, the Tax Appeal Tribunal held – “The issue here relates to the computation of penalties and interests when additional assessments or demand notices have been raised on a taxpayer. Section 13 of the 5th Schedule to the FIRS Act applies. Its provisions allow computation of penalties and interests only when the assessment or demand notices have become final and conclusive. Assessment or demand notices become final and conclusive if a taxpayer fails to file a notice of appeal within 30 days after the order or decision being appealed is made” We therefore contend that since the assessment has not become final and conclusive, FIRS cannot validly impose penalty and interest on our company yet. We hope the above information would assist FIRS to duly consider our grounds of objection and resolve our company tax affairs in respect of 2018 to 2020 tax years. Please accept, Sir, the assurances of our highest consideration as we look forward to a favourable resolution of the above mater. Yours faithfully, Managing Director For: Ingrace Multiple Concept Limited