Country Hill Attorneys & Solicitors is pleased to announce that the Tax Appeal Tribunal (TAT), South East Zone, has delivered a landslide judgment in favor of Access Bank Plc, a leading Nigerian financial institution, in an appeal challenging the legality of retrospective tax reassessments issued by the Anambra State Internal Revenue Service covering the period 1999–2018.

The Tribunal, on 14 November 2025, upheld the core arguments canvassed in our Final Written Address and set aside the of Best of Judgment (“BOJ”) assessment and penalty demands cumulatively amounting to ₦15,116,351,389.93. The Tribunal agreed that the tax authority lacked the legal basis under the Personal Income Tax Act (PITA) to reopen or reassess PAYE liabilities going back 7 years without first establishing a prima facie case of fraud, willful default, or neglect on the part of the taxpayer.

Background of the Dispute

The matter originated when, after several payments of revised assessments for the periods of 2012–2017 and 1999–2018, the Anambra State Internal Revenue Service issued yet another BOJ demand letter in 2023, followed by a Final Demand assessing additional PAYE liability with interest and penalties as well as 1% penalty under the Anambra State Revenue Law totaling the sum of ₦15,116,351,389.93.

Objecting to the additional assessment, Access Bank Plc promptly filed its Notice of Appeal and raised recondite issues of law relating to the Revenue Authority’s power to assess additional tax liabilities above six years and interpretation of the law in relation to Sections 55 and 58 Personal Income Tax Act and Section 375 Companies and Allied Matters Act 2020.

In arguing its case, the Appellant raised germane issues of law for consideration viz:

  1. Whether the Respondent erred in law and its action null and void by undertaking a tax investigation covering the 1999-2018 years of assessment in the year 2024 without establishing a prima facie case of fraud, willful default or neglect contrary to Section 55 of the Personal Income Tax Act
  2. Whether the Respondent erred in law in issuing a Best of Judgment (BOJ) assessment of N15,116,351,389.93 for PAYE liability for the years 1999-2018 without any legal basis or justifiable computation, contrary to the provisions of PITA which assessment is liable to be set aside for being null and void.
  3. Whether the Respondent acted ultra vires in imposing penalties, retrospective penalties and interest charges on the Appellant for alleged non-remittance of PAYE tax for the years 1999-2018, despite the objections of the Appellant and the said penalties and interest rates are liable to be set aside for being null and void.

In arguing Issue 1, it was the Appellant position in its Final Written Address that the tax period of 1999-2018 was statue barred based on the provision of Section 54(5) and Section 55 (2) Personal Income Tax Act and decisions of the court in Appeal No: TAT/SEZ/001/17 POLARIS BANK PLC V. ABIA STATE BOARD OF INTERNAL REVENUE and Appeal No: TAT/SSZ/005/2020 ECO BANK NIG LTD V. DELTA STATE BOARD OF INTERNAL REVENUE. The Appellant further highlighted the provision of Section 375 Companies and Allied Matters Act 2020, which mandates companies to keep their financial records for a period of 6 years. The Appellant argued that any additional tax assessment outside the period of six years as prescribed by the Act can only be carried out when the tax authority has established a case of fraud, willful default and neglect and this burden can only be established by a court or tribunal before any investigation/assessment can take place as held in Appeal No: TAT/SSZ/017/2018 CITIBANK NIGERIA LTD V. RIVERS STATE BOARD OF INTERNAL REVENUE.

In arguing Issue 2, the question of what amounts to a best of judgment assessment was analyzed and when such BOJ can be exercised by the Tax authority. The interpretation of Section 54(3) PITA was analyzed viz a viz the previous assessments, payment receipts and unfair conduct of the Tax Authority in issuing the additional assessment outside the statutory period without recourse to the provisions of the law.

In arguing Issue 3, the issue of whether an assessment which has been promptly contested in accordance with Section 58(1) PITA can be subject to penalties and interest was argued extensively relying on several decided authorities such as Appeal No: TAT/LZ/VAT/008/2015 BRASOIL OIL SERVICES COMPANY V. FIRS and TETRA PAK WEST AFRICA LTD V. FIRS (2016) 24TLRN 95

In resolving the case, the Tribunal formulated two germane issues for determination:

  1. Whether the Respondent was right in issuing the Appellant with the additional notice of November 16 2023 for the tax period of 1999-2018.
  2. Whether the Respondent was right to impose interest & penalties by the revised assessment of June 2024 despite the Appellant’s objection.

The tribunal, in its erudite ruling, emphasized the fact that the essence of tax liability is precision, certainty and finality of assessment and that statutory authorities must exercise their power in accordance with the law and fairly. The tribunal made the following findings, summarized as follows;

  • Power of the tax Authority to carry on additional assessment:

The Tribunal noted that the Tax authority can carry out additional assessment and that the threshold for additional assessment by the Tax Authority only comes into play when the tax authority discovers that the taxable person has not been assessed or assessed with a lesser amount and this power is to be exercised in the relevant year of assessment or within 6 years of the assessment.

  • The Six-Year Limitation Rule and the strict requirement to prove the existence of fraud, willful default and neglect:

The Tribunal noted that whilst the Respondent has the power to exercise additional assessment, however same must only be done within the 6-year limitation rule under Section 55 (2) PITA and the only leeway to carry on additional assessment outside 6 years is to validly satisfy the statutory condition under Section 55 (2) viz to prove fraud, willful default and neglect. It is only upon the proof of any of the above-stated conditions can a tax authority can carry on a reassessment after the statute-barred limit.

The requirement of the existence of fraud, willful default or neglect with certainty and credibility is the only key to re-open an earlier assessment and reliance on mere mention of fraud or willful default, further review or failure to provide documents does not amount to proof of willful default, fraud or neglect. The tax authority bears the evidential burden to proof the existence of fraud, willful default or neglect.

  • Imposing interest & penalties whilst objections are pending:

The tribunal noted that penalties and interests can only apply on an assessment that is final and conclusive and not where there is in existence an existing objection in compliance with Section 58 PITA.

This decision is significant as it reinforces important principles of Nigerian Tax Administration, which include:

  • The tax authority’s power to carry on additional assessment is valid and unfettered only within the year of assessment or six years thereafter.
  • The Tax authority’s power to carry on additional assessment outside six years cannot be exercised without proof of the exceptions under Section 55(2) and doing so amounts to abuse of power by tax authorities.
  • Only credible factual and evidential proof of the existence of fraud, willful default or neglect can lead to reopening the statute-barred tax years and it is only a court or tribunal that can establish the existence of fraud, willful default or neglect.
  • The legal burden of establishing the existence of fraud, willful default or neglect lies with the Tax authority and not the taxpayer and failure of the taxpayer to provide information or documents does not amount to fraud, willful default or neglect.
  • Companies are to keep accounting records for a period of six years
  • That BOJ assessments must be grounded in verifiable computation, not broad allegations or inaccessible third-party information;
  • That taxpayer rights to administrative finality, certainty, and fair hearing remain protected.

The reasoning adopted by the Tribunal builds on and strengthens the evolving jurisprudence on BOJ assessments, PAYE audits, and when/how an additional PAYE assessment can be carried out.

 

Ifeoma Enyinnaya

Founding Partner

Country Hill Attorneys & Solicitors