The High Stakes Of Missing Deadlines In Tax Disputes

Tax disputes are inherently complex, but one crucial element remains indisputable: the importance of adhering to statutory timelines. This truth was powerfully underscored in the case of Havi t/a Havi and Company Advocates v Commissioner-General Kenya Revenue Authority (KRA) (2025), where the Appellant lost a tax appeal of over KES. 100 million due to his failure of lodging his Objections within the stipulated statutory timeline.  This article delves into how the failure to meet statutory deadlines turned what could have been a landmark victory into a devastating loss. Read on to find out how procedural missteps led to a lost opportunity for the Appellant to have his matter determined on merits of his case.  

Background: The battle over taxes amounting to over KES 100 million 

The dispute began when KRA issued tax assessments totaling Sh114.25 million for Income Tax, PAYE, and VAT over the years 2016-2020. According to the KRA, the Appellant failed to declare income properly and had not remitted VAT as required, leading to significant adjustments in its taxable income. The Appellant, operating under Havi and Company Advocates, disputed the assessments, arguing that the tax demands were not only inflated but that he had already made some payments for VAT between 2016 and 2018. 

The KRA’s investigation revealed discrepancies between the Appellant’s reported income and actual turnover, and further scrutiny highlighted the Appellant’s failure to remit VAT as a withholding agent. While the Appellant contended that the tax assessments were incorrect, with specific objections to the revised taxable incomes for the years 2018, 2019, and 2020, the Tax Appeal Tribunal focused on the procedural failures, rather than the substance of his arguments. 

The Crucial Procedural Hurdle: Missing Deadlines 

A critical aspect of the tax dispute was the Appellant’s failure to adhere to the timelines set out in the Tax Procedures Act (TPA) for filing objections against the Commissioner’s assessments. Objections to tax assessments must be lodged within thirty (30) days of receiving an assessment. The Tax Appeal Tribunal held that the Appellant’s objections were not lodged within the stipulated timeframe. Moreover, despite being given an extension of time by the Commissioner within which to file the notice of objection, the Appellant, yet again, squandered his rights as a taxpayer by objecting late.  

This delay in filing the Objections was the key reason the Tribunal dismissed the appeal. The Tribunal notes that it did not sight an appealable decision and therefore the Appellant did not comply with Section 13 (2) of the TATA in filing the Appeal which mandates strict adherence to timelines when lodging Objections and filing appeals. The Appellant’s failure to comply with these procedural requirements meant that the merits of his tax claims were never addressed. 

Time is Money- If you miss the deadline, you miss your opportunity to fight back 

The case vividly illustrates the high stakes of failing to meet statutory timelines in tax disputes. The Tax Appeal Tribunal ruled that procedural compliance—not the substance of the Appellant’s tax objections—was the deciding factor in this case. The failure to meet the 30-days deadline for filing Objections ultimately resulted in the loss of the chance to challenge the tax assessments, regardless of the merit of the Appeal. 

In tax disputes, time is money, and missing deadlines can cost more than just the right to appeal—it can cost a business’s financial stability. This case is a powerful reminder of the importance of timely compliance with tax laws and underscores the necessity of procedural precision in tax disputes.  

Similarly in the case of African Fund for Endangered Wildlife v Commissioner of Domestic Taxes (Tax Appeal E362 of 2024) [2025] KETAT 16 (KLR) (Commercial and Tax) (17 January 2025) (Judgment) the Commissioner issued the Appellant with an Objection Decision and confirmed a tax assessment amounting to KES. 20,574,246.00 as principal taxes principal taxes, penalties and interest. The Appellant lodged its appeal against the Objection Decision outside the statutory timeframe. 

The Tribunal dismissed the appeal on the grounds that it lacked jurisdiction in the matter on the basis that the Appeal was filed out of time without the Tribunal’s leave. The Tribunal held that the Appeal was not only incompetent but also improperly before the Tribunal. 

Equally, In the case of Sergon v Commissioner of Domestic Taxes (Tax Appeal E248 of 2024) [2025] KETAT 19 (KLR) (24 January 2025) The Commissioner, in a bid to establish whether taxes were paid on the funds utilized by the Appellant, a male Kenyan citizen and an employee of the World Health Organization, in acquiring property carried out a verification process of the records of the Appellant for accuracy of income declarations for the periods between January 2018 to December, 2021. 

The Commissioner demanded evidence that the properties were purchased using the Appellant’s tax-exempt salary. The Appellant failed to provide his bank statements which led the KRA to classify the source of funds for purchasing the property as underdeclared income and through its Objection Decision, the KRA confirmed the assessment of income tax amounting to KES. 35,909,292.00.  

The Appellant appealed against the said Objection Decision on the grounds that he is employed by WHO and that his source of income is from salaries and emoluments paid by WHO. He further testified that he is tax exempt based on several laws and agreements, including the Vienna Convention on Diplomatic Relations, the Host Country Agreement between the UN and Kenya. 

 The Respondent averred that the issue at hand was not focused on whether the Appellant’s income is tax exempt, but rather to verify that indeed the income source that was used to purchase the parcels of land was from the employer WHO.  

The Tribunal in its decision held that the Notice of Appeal was filed 90 days outside the statutory timeframe, without leave of the Tribunal. In dismissing the appeal, the Tribunal ruled on procedural compliance, not the substance of the appeal and observed that Statutory timelines are set in mandatory terms and consequently the Appeal is not properly before it. 

These judgments should serve as a wake-up call for all taxpayers: ensure that you adhere to the strict statutory timelines for lodging objections and appeals. The stakes are too high to ignore the procedural formalities that could make or break your case. 

HOW WE CAN HELP 

At CM Advocates LLP, we provide expert guidance on tax procedures, compliance, and dispute resolution, ensuring that your business stays on the right side of the law and that your rights are protected. Whether you need advice on filing objections, meeting statutory timelines, or navigating complex tax disputes, our team of experienced professionals is here to support you every step of the way. For any inquiries, please feel free to reach out through law@cmadvocates.com.