The Kenya Revenue Authority (KRA) has won a tax case against economist David Ndii, who was ordered by the High Court to pay Sh2.8 million in VAT for his earnings between 2011 and 2015.
The disagreement hinged on whether KRA made a mistake by failing to notify Dr Ndii in writing that his firm had exceeded the Sh5 million yearly sales threshold and that the economist was responsible for collecting VAT and remitting it to the taxman.
Despite the absence of proof that KRA had told Dr Ndii that he had reached the Sh5 million level, Justice David Majanja decided that the economist had a responsibility to register as a VAT collecting agent.
The VAT claim was found unlawful by the Tax Appeal Tribunal because KRA employed the incorrect mechanism to inform Dr Ndii of his tax debts, forcing the taxman to file a lawsuit in the High Court.
In March 2020, a tribunal presided over by Josephine Maangi overturned KRA’s assessment and dismissed a Sh2,807,758 claim.
Despite the fact that Dr. Ndii did not oppose the VAT assessment, the tribunal found that KRA failed by neglecting to inform him in writing, as required by law.
KRA told the High Court that it sent an automated email to Dr. Ndii informing him of his VAT registration.
Because his company’s annual gross revenues exceeded Sh5 million, KRA asked that Dr Ndii pay VAT.
Dr. Ndii was not registered as a VAT agent, but KRA included him anyhow, resulting in the Sh2.8 million demand. KRA allegedly accessed Dr Ndii’s bank accounts in order to prove his financial activities, according to the court.