A best-of-judgement assessment with 12 days left
Golden Palm Catering Ltd is an Abuja-based company providing event catering. It is registered for VAT and files monthly. In March 2025, following a questionnaire sent to its former finance officer who left in 2024, FIRS issues a best-of-judgement VAT assessment of NGN 18.5m for 2023, plus NGN 4.2m penalty and interest. The assessment notice is dated 3 March and was served by courier on 7 March. The company has 12 days left in the 30-day objection window. Its accounting records for 2023 are incomplete: the sales ledger is missing for January to April, but bank statements and POS settlement reports are available. The new finance manager wants to 'ignore it until we have full records' and believes the assessment is excessive because it used gross bank deposits without allowing input VAT on food purchases. The company has not filed a notice of objection. The tax director asks you for urgent advice.
1. What immediate actions should the company take before the objection deadline?
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The deadline is the priority. The notice was served on 7 March, so the 30-day objection period expires on 6 April. Waiting for complete records risks the assessment becoming final.
Immediate steps:
- File a protective notice of objection within the deadline, even if the detailed grounds are perfected later with the tax authority's agreement. State that the assessment is excessive and arbitrary and that the company will provide supporting evidence.
- Request the assessment working papers and any correspondence, so the company knows exactly what FIRS assessed.
- Reconstruct records from bank statements, POS reports, purchase invoices and supplier statements. Separate VATable sales from transfers, loans and other non-sales deposits.
- Quantify input VAT claimed on food and other purchases, but only where valid tax invoices exist.
- Consider paying the undisputed portion or seeking an administrative stay, while making clear that payment is without prejudice to the objection.
- Diary the next deadline for any appeal to the Tax Appeal Tribunal if the objection is not resolved.
2. Assess the strengths and weaknesses of the objection and the evidence you would rely on.
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The strongest ground is that a best-of-judgement assessment must be reasonable. If FIRS treated every bank deposit as VATable sales, the assessment may include non-sales items such as inter-account transfers, shareholder loans or refunds. Bank statements and POS settlement reports can help reconstruct actual sales.
The input VAT argument is weaker if the company cannot produce valid tax invoices for food purchases. A bank payment or supplier statement is not automatically a valid VAT invoice. Missing January to April sales ledger entries also weaken the company's ability to prove the correct sales figure. The burden is likely to be on the company to show that the assessment is excessive, not on FIRS to prove every naira.
Evidence to gather: bank statements, POS settlement reports, purchase invoices, supplier contracts, VAT returns actually filed, and a reconciliation from bank deposits to declared sales. A clear reconciliation is more persuasive than a general assertion that the assessment is 'too high'.
3. What are the consequences if the deadline is missed, and what alternatives remain?
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If no valid objection is filed within 30 days, the assessment may become final and payable. Penalty and interest can continue to accrue, and enforcement action such as bank attachment or distraint may follow. The company would lose the normal statutory route to the Tax Appeal Tribunal, because an appeal generally requires an objection decision.
Alternatives are weaker but may include: asking FIRS for administrative review or re-assessment; paying under protest and seeking a refund; requesting a waiver of penalty or interest; or negotiating an instalment plan. These depend on FIRS's discretion and are not substitutes for a statutory objection.
The lesson is to file on time with the best available grounds, then supplement the evidence. The finance manager's proposal to wait for complete records is therefore high-risk.