- 15 Marks
TAX – Nov 2014 – L2 – Q6 – Tax Administration and Enforcement
Draft an objection letter addressing a Best of Judgment assessment and provide relevant tax liability calculations for Osondu Bako Company Ltd.
Question
Osondu Bako Company Limited has been in business for many years as a general business entrepreneur.
The Company prepares its accounts to 31 December of every year. The Company, however, submitted its audited Financial Statements for the year ended 31 December 2012 on 27 May 2013.
The Company applied for a Tax Clearance Certificate on 26 August 2014, but the issuance of the certificate was delayed by the Revenue. Instead of issuing the Tax Clearance Certificate, a Best of Judgment assessment of N3,450,000 was raised on the company.
The date on the Notice of Assessment was 30 May 2014, but it was served on the company on 31 August 2014.
Stated below is information relating to the financial statements of the company for the year ended 31 December 2012:
| Financial Statement Item | Naira (N’000) |
|---|---|
| Profit per Accounts | 3,400 |
| Depreciation | 380 |
| Capital Allowances agreed with Revenue | 590 |
| Revenue | 12,050 |
| Net Assets | 8,400 |
| Gross Profit | 960 |
| Share Capital | 10,000 |
The company paid all the tax liabilities. Despite this, the Chief Executive Officer was surprised and concerned upon receiving the Notice of Best of Judgment Assessment from the tax authority. Consequently, you have been engaged by the company as a Tax Consultant.
You are required to:
- Write a Letter of Objection to the Tax office in respect of the Best of Judgment Assessment along with relevant workings.
(15 Marks)
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