Nestlé Nigeria Plc v. Federal Inland Revenue Service

A multi-year additional assessment against a listed manufacturer, vacated in full on the strength of the audit record the revenue had itself accepted.

Forum

Tax Appeal Tribunal

Year

2019

Discipline

Taxation

Outcome

Assessment set aside

The background

What happened

Following a routine desk review, the revenue raised additional assessments spanning four financial years against a listed fast-moving consumer goods manufacturer.

The reconstruction disallowed deductions that had been examined and allowed during an earlier field audit of the same years.

The company objected within time; the objection was refused and a notice of refusal to amend followed, opening the appeal window.

The question for the court

Whether a revenue authority may reopen and reconstruct taxable income for years already examined, without new facts and without displacing deductions previously allowed.

Assessment papers and workings laid out for review

Counsel

Osborne Osborne, Principal Partner, leading the taxation team

Result

The tribunal set aside the additional assessment in its entirety.
The penalties and interest computed on the assessment fell away with it.
The audit position for the four years was confirmed, closing the exposure permanently.

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How it was argued

The case we put

Three lines of argument, run together rather than in the alternative.

The audit file was the record

We rebuilt the four years from the revenue's own working papers, showing each disputed deduction had been tested, queried and cleared during the field audit. The reconstruction was therefore not an estimate formed on incomplete information — it was a second bite at a closed record.

Best of judgment has limits

A best-of-judgment power exists where the taxpayer has failed to supply information. Where the information was supplied, examined and accepted, the statutory condition for the power simply never arose.

Quantum, in the alternative

We filed a full reconciliation as an alternative case so the tribunal was never asked to choose between the whole assessment and nothing — a discipline that keeps a bench comfortable ruling for the taxpayer.

Financial years in issue

Of the assessment vacated

Months to judgment

Why it matters

The decision is regularly cited by taxpayers resisting reopened years, and it shaped the way our tax team now preserves audit correspondence from the first query onwards.

Tax Appeal Tribunal · 2019

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