1 Comment to “Business Killing Taxes”

  1. efe okorugbo says : Reply

    how not to handle a tax investigation

    Normally, the FIRS assigns special task force from the Tax Audit & Investigation department to investigate and handle back duty investigations, wrong & doubtful returns and suspected violations of the tax laws, in a bid to ensure the correct assessment of taxpayers.

    The question is:

    If you or your clients are singled out for tax investigation, what should you do?

    Answer:

    At that point, not much can be done.

    In fact, the only option available to you is to engage a seasoned tax consultant who understands the dynamics of a tax investigation.

    This you must do before you hand over any records or make any statement to the officials of FIRS. Disclosing stuff at that point may come back to hurt you when the investigation deepens.

    Here’s what happened when the FIRS task force opened up the tax returns of one Mr Chinedu,(CEO) a Lekki based Social Media Strategist who mistakenly thought he could pull a fast one over on the investigators.

    Mr. Chinedu arrived at his office one glorious morning. On his way to the office, he’d received a call from one of his main clients on a big job the client wanted him to help them with. He gave his word and scheduled an appointment for 9:30 am the same day. Chinedu got to the office at exactly 8:00 am.

    As he was making his way through the parking lot, he sighted two men in blue suit, gentle-looking hanging around his office and he thought to himself, “these chaps hadn’t called for an appointment.” Too bad, not a good time to talk, “said Chinedu.”
    He was scheduled for a client meeting at 9:30 am.

    Chinedu alighted from his car, met the gentlemen beside the door of his office, greeted them and they exchanged pleasantries.

    The men asked, “Are you Mr Chinedu?” He replied and said, “yes.” “Any problem?” No sir, they replied.

    They introduced themselves as officials of FIRS and requested to talk with him for few minutes and would like to ask him some questions bothering on his tax returns.
    Chinedu respected and gave them an audience.

    But because Chinedu, a savvy business man who reads far and wide had read an article on a blog on how to handle FIRS officials without the help of a tax consultant present, he saw no harm in agreeing to meet with them for 30 minutes before heading off for his client scheduled meeting.

    The interruption didn’t help, and things soon went sour.

    The FIRS officials’ unrelenting questioning stretched the conversation well beyond one hour, and he had to call his client to cancel his scheduled meeting which was for 9:30am

    What condemned Chinedu was that the two officials spotted more than N4,670,000 in payments from clients that somehow never found their way into the records for receipts that were used to prepare his tax returns, and the inquisitors were unyielding in their unwillingness to accept his explanations for why those payments went unreported.

    Now, there’s something dramatic about the FIRS special task force which we need to know and that is, because they’ve been in this game for a very long time, they understand the psychology and mindset of taxpayers and the way they act when they come under tough scrutiny and questioning, and so, they already have a template on how to disarm the smartest of all business person who’s failing in his/her responsibility with tax compliance.

    At one point, the FIRS special task force noted that Chinedu became extremely nervous and started to sweat, his hands shaking, though, he was in an air-conditioned environment. Infact, he even sought their permission to drink water and go to the toilet.

    After spending close to two hours drilling Chinedu, he realized that the FIRS officials had him dead to rights, and he confessed to not reporting the payments in question.

    He wound up paying all his tax liabilities, interest and penalties and this created a deep hole in his bank account. He was lucky enough not to serve a jail sentence.

    Mark this down: If you or any of your clients is under investigation by the FIRS, my counsel to you is to not speak to them without your Tax Consultant present.

    And if you do not have one now, my counsel to you again is, GET ONE NOW!

    I hope this helps.

    Chidera Anele

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