A letter from KRA saying you owe more tax can be alarming. You do not have to accept it. The Tax Procedures Act gives you a right to object, and if the objection fails, to appeal. The deadlines are short and the process is formal, so act quickly. This guide explains the steps in plain language. It is general information and not legal advice, so involve an adviser for large amounts.

What an assessment is

An assessment is KRA's decision on how much tax you owe, usually after an audit or a review of your return. It may be an amended assessment that changes a return you filed, or a default assessment where you did not file. You will receive a notice setting out the tax, penalties and interest, and the reasons. Before an assessment, KRA usually issues an audit findings letter that gives you time to respond: see what to expect in a KRA audit. A good reply at that stage can avoid the assessment.

The deadline for objecting

You must lodge a notice of objection within 30 days of receiving the assessment. The notice must be in writing, through iTax, and must state the grounds. Late objections are accepted only if you apply to the Commissioner and show a good reason, such as illness or lack of notice, and the application must itself be made within a limited period. Do not wait: mark the date on a calendar the day you receive the notice.

What to include in the objection

  1. Identify the assessment: the notice number, the tax type and the period.
  2. State the grounds precisely. Say what part you disagree with and why, with reference to the law or the facts. "We disagree" is not enough.
  3. Show your own computation of the tax you think is due.
  4. Attach evidence: invoices, contracts, bank statements, payroll records and correspondence. Use the records you kept: how to keep business records for KRA.
  5. Pay the undisputed tax. You must pay any tax you do not dispute by the due date, or your objection may be treated as invalid for that part. Penalties and interest keep running on the disputed amount if you lose.

Use the KRA penalty calculator to see how much penalties and interest add, and the corporation tax calculator or PAYE calculator to build your own figures.

What happens next

KRA reviews the objection and may ask for more documents. It must make a decision within a set period, which is currently 60 days from the date you lodged the objection and supplied all required information. If it does not decide in time, the objection is treated as allowed. The decision is called an objection decision. KRA may allow the objection in full or in part, or reject it.

Appealing

If you disagree with the objection decision, you can appeal to the Tax Appeals Tribunal within 30 days of receiving it. The appeal is a formal document stating the grounds and attaching the decision. The Tribunal hears both sides and decides. Parties can appeal further to the High Court on points of law. You may represent yourself at the Tribunal, but a tax adviser or advocate helps with complex matters. When you appeal, you must pay the tax in dispute or a part of it as the law requires, and the rules can change, so check the current requirements.

Alternative dispute resolution

The Tax Procedures Act also allows alternative dispute resolution, such as mediation, in some cases, for parties who wish to settle before or after the Tribunal. KRA publishes the conditions.

Practical tips

When not to object

If the assessment is right, objecting only delays payment and keeps interest running. Pay it, and ask about a payment plan or waiver of penalties.

Frequently asked questions

Can I object to a penalty only? Yes. You can object to the penalty or interest part of an assessment separately from the tax, for example if you have a reasonable cause.

Do I need a lawyer for the Tribunal? No, but representation helps on legal questions and evidence.

Does objecting stop KRA from collecting? Not automatically. The undisputed tax must be paid, and KRA may take recovery steps on the rest unless an agreement or order is in place.

What is the time limit for KRA to assess me? The Act sets limits, generally five years from the filing date, with longer periods in cases of fraud or evasion.