Whether you’re an individual taxpayer or a business owner in Nigeria, understanding how tax appeal works is essential for protecting your financial interests and ensuring you get fair assessment of your tax liabilities under the law.
This comprehensive guide walks you through the tax appeal process and equips you with the knowledge to effectively challenge questionable tax assessments.
When You Might Need To Appeal
A tax assessment is an official determination by tax authorities of the amount of tax you owe based on your income, profits, or other taxable activities. These assessments may include calculations of liabilities, penalties and interest. You might consider appealing a tax assessment for several compelling reasons:
- Computational errors in the assessment calculation
- Misinterpretation or misapplication of tax laws
- Disputes over allowable deductions, exemptions, or reliefs
- Procedural irregularities in the assessment process
- Assessments that seem disproportionate compared to similar cases
Appealing an unfair assessment isn’t just about potentially reducing your tax liability, it’s about ensuring the tax system operates with transparency, consistency and fairness.
The Tax Appeal Process
Step 1: Filing an Objection with the Tax Authority
The first formal step in challenging a tax assessment is filing a written objection directly with the issuing tax authority. This may be the FIRS or your state IRS. This crucial step must be taken within 30 days from the date you received the assessment notice.
Your objection letter should:
- Clearly identify the assessment being contested
- Provide your taxpayer identification number and relevant details
- Articulate specific grounds for disagreement
- Include supporting documentation and evidence
- Request a review of the assessment
Upon receiving your objection, the tax authority is obligated to review it and respond accordingly. They may amend the assessment if they find merit in your objection or issue a Notice of Refusal to Amend (NORA) if they stand by their original determination.
Step 2: Appealing to the Tax Appeal Tribunal (TAT)
If you receive a NORA or remain dissatisfied with the tax authority’s response, your next recourse is to appeal to the Tax Appeal Tribunal (TAT). The TAT was established under Section 59 of the FIRS Act of 2007 as a quasi-judicial body specifically designed to adjudicate tax disputes.
Filing the Appeal:
You must file your appeal within 30 days of receiving the NORA using Form TAT 1A. Your appeal submission should be filed at the appropriate TAT zone where the matter emanated and must include:
- Your grounds of appeal that is, clearly articulated reasons for contesting the assessment
- The specific relief you are seeking
- Your particulars including your name, address, TIN, email, assessment years, relevant tax law, dates of service)
- Supporting documents including copies of the assessment notice, objection letter, NORA, and any relevant evidence
- A list of witnesses, if this is applicable to your situation, their sworn statements, and relevant documents they will reference
The TAT sits in eight zones across Nigeria. If you’re uncertain which zone has jurisdiction over your case, you can file at any zone’s secretariat, and the Chairman will direct it to the appropriate zone.
Fees Structure:
Appeal fees vary based on the disputed amount:
- Up to ₦100,000: ₦2,000
- ₦100,001 to ₦500,000: ₦6,000
- ₦500,001 to ₦5,000,000: ₦10,000
- Above ₦5,000,000: ₦14,000
- Appeals with no monetary claim: ₦4,000
Important 2024 Update on Security Deposits:
A significant development occurred in 2024 when the Federal High Court struck down provisions that required aggrieved taxpayers to pay a security deposit, previously 50% of the disputed amount, before filing appeals. This ruling removed a substantial financial barrier which has made the appeal process more accessible to all taxpayers.
Step 3: The Hearing Process
Once your appeal is properly filed, the TAT will schedule hearings where both you and the tax authority can present your cases. The tribunal process includes:
Respondent’s Reply: The tax authority must respond within 30 days of being served with your appeal, indicating whether they contest the appeal and providing their reasoning if applicable.
Pre-trial Conference: The TAT may order a pre-trial conference to narrow the issues in dispute and potentially facilitate settlement.
Tribunal Proceedings: During the hearing, both parties present evidence, call witnesses, and make legal arguments. The TAT examines all submissions and evaluates the merits of the case.
Timeline: The TAT is required to conclude proceedings within six months from the commencement of the trial, though it may approve a different timeframe if necessary.
Step 4: The TAT Decision
After deliberation, the TAT will issue a decision that may:
- Confirm the original assessment
- Reduce the assessed tax liability
- Increase the assessment, if this is justified by evidence
- Annul the assessment entirely
The decision is documented with reasons and signed by the Chairman.
Step 5: Post-TAT Options
If you’re dissatisfied with the TAT’s decision, you have additional options:
Review of Decision: You may apply for a review within 14 days of the decision delivery if there’s ambiguity, error, omission, or fraud. The respondent has 7 days to reply and the Tribunal must exercise its review power within 14 days.
Appeal to Higher Courts: You can appeal to the Federal High Court on a point of law within 30 days from the TAT decision date. The appeal process potentially continues to the Court of Appeal and Supreme Court, creating a comprehensive pathway for resolution.
Modern Conveniences in the Tax Appeal Process
The TAT has modernized its processes to improve accessibility and efficiency:
Electronic Filing: You can now file notices and processes electronically through the TAT portal, reducing paperwork and saving time.
Virtual Hearings: The TAT allows for virtual proceedings, particularly for delivering rulings and applications, using approved technology platforms. This innovation eliminates the need to travel physically to the Tribunal for certain proceedings.
Documentary Evidence Option: Parties may dispense with oral hearings where a dispute can be resolved based on documentary evidence alone. This streamlines the process by allowing you to file all relevant documents with your Notice of Appeal.
Practical Tips for a Successful Appeal
- Keep comprehensive records of all tax-related transactions and communications with tax authorities.
- Adhere strictly to timelines for filing objections and appeals—missing deadlines can forfeit your right to appeal.
- Prepare thorough documentation that clearly supports your position and addresses each disputed item in the assessment.
- Consider professional representation from tax attorneys, chartered accountants, or authorized tax advisers who specialize in tax disputes.
- Stay informed about tax law updates that might affect your case, including recent court rulings.
Conclusion
The process of appealing a tax assessment in Nigeria is structured to uphold the principles of fairness and due process. While navigating the appeal process requires attention to detail and adherence to procedural requirements, understanding the steps involved empowers you to effectively assert your rights as a taxpayer.
By following the established appeal procedures, from filing an initial objection to potentially pursuing the matter through the court system, you contribute to a more equitable and transparent tax system in Nigeria. Whether you’re an individual or business taxpayer, knowing how to properly challenge questionable assessments ensures that you pay only what is legitimately owed, no more and no less.
For specific assistance with your tax appeal, reach out to Taxpal for consultation. You can also contact the Tax Appeal Tribunal directly at: Tax Appeal Tribunal No 23, Panama Street, Maitama, Abuja, Nigeria Phone: +234 905 455 0033 Email: [email protected]