Mgurumani Traders LtdVsKRA
CPA David Ndiritu Mwangi
Certified Public Accountant, Tax Agent, Tax Advisor, Tax Consultant, Business Advisor, Tax Trainer, Tax Auditor ,Tax Researcher.
#MgurumaniTradersLtdVsKRA
On 11/06/2016 MTL received a notice of intention to audit from KRA, MTL was to avail documents for the period 2011-2016
On 09/02/2017, KRA issued a further notice and requested for the same documents.
On 18/04/2017, KRA issued an assessment for VAT and Income Tax totaling to KES 228.6m
MTL raised an objection on 20/04/2017 on the following grounds:
· The assessment was based on banking, bankings are not wholly revenue
· Cost of sales ,expenses and VAT input were not considered
On 23/05/2017, KRA notified MTL that it had not availed documents and therefore the objection was invalid.
On 12/06/2017 MTL availed five invoices worth KES 23.8m for business done with NCC.MTL also availed a police abstract to prove that it lost documents on 08/06/2015 through burglary.
From the documents availed KRA noted that KES 200,000 sales were zero rated. KRA also noted the said abstract was in the name of Moonwalk Investments Ltd.
KRA issued an objection decision on 14/07/2017 and revised the tax assessment to KES 199.6m
MTL appealed on 15/08/2017. The appeal was premised on:
· KRA did not consider cost of sales
· Medicine is VAT exempt and therefore MTL wasn’t bound to file VAT
· The records that were not availed at objection level were now available.
KRA responded that it had disallowed expenditure worth KES 165.1M for lack of supporting documents.
KRA stated that MTL had registered for VAT on 03 Nov 2011 but had not made a single filing for VAT.
KRA stated that the police abstract belonged to another entity.
The tribunal ruled that MTL could not prove its case since it had failed to avail records. The police abstract provided to prove the loss of documents was in another entity’s name.
The tax assessment of 18/04/2017 was therefore upheld on 17/12/2019
Audit senior
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I am a Certified Public Accountant of Kenya, a Member of Institute of Internal Auditors of Kenya ,A Certified Systems Auditor and a Certified KRA Tax agent.
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I am a Certified Public Accountant of Kenya, a Member of Institute of Internal Auditors of Kenya ,A Certified Systems Auditor and a Certified KRA Tax agent.
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