LIRS ISSUES PUBLIC NOTICE ON PROCEDURES FOR TAX AUDIT RECONCILIATION COMMITTEE MEETINGS

Introduction

The Lagos State Internal Revenue Service (LIRS) has issued a public notice as a follow-up on the initial notice on the procedures and requirements for conducting Tax Audit Reconciliation Committee (TARC) meetings. The LIRS reiterated that the public notice is not intended to amend or override the provisions of existing tax laws in Nigeria but to modify the process of conducting TARC meetings. The LIRS, by this modification, intends to leverage technology for conducting TARC meetings after taking cognizance of the challenges posed by the COVID-19 pandemic.

The public notice was issued based on the physical distancing advisory and protocols issued on public health and safety by Government authorities as well as the provisions of Section 29 of the Finance Act 2019 which is an amendment to Section 58(1) of the Personal Income Tax Act. This section provides for the acceptability of electronic delivery of correspondence by taxpayers.

 

Summary of the public notice

The public notice is similar to the previous one issued by the LIRS on this subject. However, the major highlight of the new public notice is that taxpayers are required to state their undisputed tax liability and present the relevant evidence of payment for an objection to be considered valid. Other conditions highlighted in the new public notice similar to the previous public notice are: 

  1. All TARC meetings shall be conducted via video conferencing and shall be constituted by the LIRS. Physical meetings shall be an exception.
  2. Documentary evidence shall be provided by taxpayers in softcopies except in situations where softcopies are not available. Further, objections raised by taxpayers that are not supported by relevant documentary evidence shall be deemed moot and discharged in favor of the LIRS.
  3. All documents for resolution of an objection must be submitted one week before the TARC meeting. New documentary evidence will not be accepted during the meeting except in extraordinary circumstances and at the discretion of the TARC chairperson. Where insufficient documents are submitted along with letters of objections, LIRS may call for additional documentation. 
  4. Further, the public notice highlights the triggers for TARC meeting as follows:
    • Documents submitted in respect of an objection indicate conflicting or contradictory positions.
    • Field audit findings are materially higher than the taxpayers’ position.
    • TARC meeting is deemed necessary by the LIRS.

  

Key takeaways

By this public notice, the LIRS has emphasized the need for taxpayers to state their undisputed tax liability and provide evidence of payment for an objection to be considered valid.  Therefore, taxpayers are expected to determine their undisputed tax liability while objecting to a demand notice from the LIRS. They are also required to submit the evidence of settlement of the undisputed tax liability along with the objection letter. Further, taxpayers are advised to engage their tax consultants to determine their undisputed tax liability in order to ensure that they pay only the correct amount of tax liability.

 

Should you require further clarification with regards to these palliatives and its impact on your business, please contact us at Mazars Nigeria.