WINS CASE

KRA allowed to collect Sh18.6m tax arrears from contractor

Tribunal dismisses an appeal by Joycott General Contractors Ltd.

In Summary

• Tax Appeals Tribunal held that Joycott had failed to provide documentary evidence in support of its Appeal and neither did it provide the same during the objection.

• Joycott had sought, among other things, an order to set aside Kenya Revenue Authority’s decision made vide a letter dated April 6, 2018, confirming additional Corporation Tax and VAT assessments for 2015 and 2016. 

People queue for services at KRA offices along Haile Selassie Avenue.
People queue for services at KRA offices along Haile Selassie Avenue.
Image: FILE

The Tax Appeals Tribunal has ruled in favour of KRA in a case filed by a local company seeking orders to stop collection of Sh18,618,476 in tax arrears.

In a judgment, the tribunal dismissed an appeal filed by Joycott General Contractors Ltd. It held that the company had failed to provide documentary evidence in support of its appeal and neither provided the same during the objection.

“In line with the foregoing analysis, the appeal herein fails and is hereby dismissed. The respondent’s objection decision dated April 6, 2018, is upheld in its entirety,” the tribunal said.

Joycott had sought, among other things, an order to set aside Kenya Revenue Authority’s decision made vide a letter dated April 6, 2018, confirming additional Corporation Tax and VAT assessments for 2015 and 2016. 

It stated that it was reviewed for tax compliance for the period covering 2015, 2016 and 2017. The compliance check revealed that Joycott had provided taxable supplies to Kenya Rural Roads Authority for a contract sum of Sh9, 899,549 and payment on the same was realised in the months of May and September 2015.

KRA, however, analysed Joycott’s itax database and established that it had also provided taxable supplies to Tana Athi Water Services Board, Kenya Urban Roads Authority, Bamburi Portlands Cement, National Water Conservation and Pipeline and Impirion & Inkaisanjani Infrastructure Improvement.

KRA’s position on the appeal was that the additional assessments for VAT and corporation tax for 2015 and 2016 were proper as a tax audit was carried out for the period and revealed that Joycott had completed contractual works and under-declared the revenue earned. 

KRA’s investigation revealed under-declarations and other inconsistencies in Joycott’s returns.

“Consequently, KRA, through a letter dated January 26, 2018, and amended on March 28, 2018, issued the appellant with an assessment for additional tax of Sh18,855,976 being Value Added Tax of Sh17,541,394 and corporation tax of Sh1,314,582 inclusive of interests and penalties,” the judgment reads.

KRA amended letter dated March 28, 2018, issued Joycott with an amended assessment for additional tax on Sh18,618,476 being the value for VAT Sh17,410,453 and corporation tax of Sh1,208,023 inclusive of interest and penalties.