How to Avoid Tax Offenses and Penalties and Save Time and Money Part 1
(Offences and Penalties under Company Income Tax Act and Federal Inland Revenue Service Establishment Act)
Filing company income tax return and pay tax liability due and some other issues is a growing problem for micro, small and medium enterprises.
Fortunately, however, micro small and medium enterprises don’t have to suffer from filing company income tax return and payment of the resultant tax liability once they know not filing tax return and failure to pay tax is regarded as offence which has attendant penalties.
That’s what you’ll learn about in this write up.
Specifically, you’ll learn how about the offences and penalties under the Company Income Tax and Federal Inland Revenue (Establishment) Act. You’ll also find out what you need to do in each
situation. And you’ll even discover how tax consultant can help you out easily such that you can have peace of mind on any tax issues.
So, without further introduction, let’s jump in with a discussion of failure to file Company Income Tax…
- Failure to file Company Income Tax Return as at when due: Failure to submit self-assessment tax returns within the due date is liable to a fine of N25,000 for the first month of failure and N5,000 for each of the subsequent months in which the failure continues. What you need to do: A company is expected to file her company income tax return latest six months after the year end. The directors must make sure that the statutory audit is carried out on time to produce the audited financial statement (AFS) which is a principal document in filing company income tax return. And the directors must ensure that the tax representative file it before the due date
- Failure to deduct or having deducted did not remit: Any person who being obliged to deduct any tax but fails to deduct or having deducted fails to pay to Federal Inland Revenue Service within 30 days from the date the amount was deducted or the time the duty to deduct arose, commits an offence and shall upon conviction be liable to pay the tax withheld or not remitted in addition to a penalty of 10% of the tax withheld or not remitted per annum and interest at the prevailing CBN minimum rediscount rate and imprisonment for a period of not more than three years. What you need to do: There must be proper recording and accountability of any amount being deducted or collected on behalf of tax authorities in such a manner that will make the remittance easy on monthly basis as it were. This should be assigned as a major responsibility to a staff, where there is no enough staff, this can be outsourced to a tax consultancy firm.
- Obstruction, hinderance, molestation and assault of authorized tax officer: Any person who obstructs, hinders, molest or assaults an authorized officer in the performance of any function or does anything which impedes or intended to impede the carrying out of any search, seizure , removal or distrain, damages or destroys anything liable to seizure, prevents the arrest of any person or rescues any person so arrested commits an offence and shall be liable to a fine of not exceeding N200,000 or imprisonment for a term not exceeding 3 years or to both fine and imprisonment. What you need to do: Whenever authorized tax officer visits your place of business and properly identify him/herself, give him/her a warm welcome. Listen very well to the purpose of his/her visit and if you have anything to say, say it in a polite manner. I will advise that as soon as you receive a letter of notification from any tax authorities, contact a tax consultant to come around. This is because you are not likely to understand what they will be saying, but a tax consultant will be able to liaise between the two of you because he is knowledgeable about tax just like the authorized tax officer
- Signing of False Document: Any person who makes or signs a document which is untrue commits an offence and is liable on conviction to a fine not exceeding N200,000. What you need to do: If you have any signed document to submit to tax authorities, it is better to ask your tax consultant to review them before signing it.
- Counterfeiting or Falsification of Document: Any person who counterfeits or falsifies any document required by law or for the transaction of any business commits an offence and shall be liable on conviction to a fine not exceeding N200,000 or to imprisonment for a term not exceeding 3 years or both. What you need to do: Under no circumstances should you be found counterfeiting or falsifying any document. Let all your documents to be submitted to the tax authorities be verified by your tax consultant.
- Failure to Pay Tax Within Prescribe Period. Any person who fails to pay tax due within prescribed period is liable to a fine of a sum equal to 10% of the amount of the tax payable plus interest at the prevailing minimum rediscount rate of the CBN plus spread to be determined by the Minister from the date when the tax becomes payable until it is paid and the provision of the Act relating to collection and recovery of tax shall apply (Naira Remittance). In the case of foreign currency remittance, the tax due plus interest at the prevailing London Interbank offered rate (LIBOR) or the prevailing CBN minimum re-discount rate whichever is higher, plus spread to be determined by the minister from the date of when the tax becomes payable until it is paid. What you need to do: Once a tax is due for payment within a certain period, it advisable that you work towards the payment. However, where the payment cannot be made in a lump sum, the law provides that an application can be made to the tax authorities for instalment payment and the application must be approved by the tax authority.
- Possession of Offensive Weapons: Any person who is armed with any offensive weapon commits an offence and shall be liable on conviction to imprisonment for a term not exceeding 5 years. What you need to do: It is a known fact that possession of offensive weapon is illegal. Tax issues is not a matter of violence. And as such tax payer should not see it as a matter of life and death. Tas issue does not warrant possession of offensive weapon.
- Using Offensive Weapons to Cause Injury to an Authorized Officer: Any person who while armed with an offensive weapon causes injury to an authorized officer of the service in the performance of any function or duty commits an offence and shall be liable on conviction to imprisonment for a term not exceeding 10 years. What you need to do: Don’t ever fight with the authorized tax officer, whatever the amount of tax liability, it is not a matter of life and death. Tax issues are bound to be resolved.
You just discovered the offences and penalties under Company Income Tax Act and Federal Inland Revenue Service (Establishment) Act and what you need to do under each circumstance.
However, a word of warning – just knowing the offences and penalties isn’t going to save you but you need a tax consultant who will be able to guide you in each circumstance.
That’s because the key is that you need to take action on what you just learned any time you have an issue with the tax authorities. And that’s why I will encourage you to return to read this write up again. review the offences and penalties, and then start reviewing what you need to do.
However, you need a tax consultant to help you because they understand the language of the taxman. The sooner you do, the sooner you’ll start enjoying peace of mind because you will be
paying you taxes with a smile. Please sign up for our our free gift for you. The Ultimate Guide to Pay Your Tax Easily. Stay tune to Part 2.