Prevailing Security approaches High Court to challenge P80m tax bill
Prevailing Securities through its Judicial Manager Danny Julius Guduli has petitioned the High Court seeking an assessment review of its alleged P80 million VAT and Income tax that the taxman says it owes.
Prevailing Securities sparked controversy when Botswana Unified Revenue Services (BURS) selected it for tax investigation on the 17th August 2018. The company was forced into Judicial Management on the 2nd September 2019.
The company is now contesting the hefty tax bill from the taxman. Prevailing Securities through their attorneys, Serole and Partners, wrote to BURS recently that on numerous occasions, both telephonically and in person through its Directors and Judicial Manager, they attended to BURS to request for reassessment but they were ignored.
Guduli petitions that BURS additional VAT assessment of P7, 179, 977.92 against Prevailing Securities for the period January 2013 to December 2017 be reviewed and set aside; that the BURS imposed penalties of 200 percent against Prevailing Securities in the sum of P14 359, 955.85 be reviewed and set aside; that the respondents (BURS) Income Tax Assessment of P56 703 834.34 inclusive or a penalty of 200 percent against Prevailing Securities be reviewed and set aside; that BURS be ordered to conduct a fresh assessment taking into account Prevailing Securities running costs and expenses within 30 days of the Order of the Court; and that pending the tax assessment, and determination of the objections raised by Prevailing Securities, the respondents be retrained and interdicted from any or further actions against Prevailing Securities in relation to this matter.
Serole and Partners argued “client instructs us that upon receipt of notice of assessment in the total sum of P81, 766, 882, 46 (VAT and Income Tax inclusive) it submitted detailed list and/or account of matters which were not taken into consideration when they ought to have been at the time of assessment”.
According to the lawyers, these are some of the errors made by BURS, which have been previously brought to their attention. “You have chosen to deliberately ignore such concerns and proceed to impose extreme penalties on amounts done and payable resulting in the collapse of the business. That, you acted mala fide is evident from letters and execution.
“Client received Notice of Assessment on the 30th January 2019, without being provided with the findings of the Assessment. The next day, 31st January 2019, you attended to execute our client’s property”.
The attorneys alleged that further to demonstrate mala fide, the taxman, contrary to the judicial management orders, deliberately continued with his acts. In pointing out the errors of the tax master, Guduli articulated that in the Notice of Assessment, BURS acknowledge inter alia that Prevailing Securities understated output tax as evidenced by the company bank statements, which had indicated that the company had received more ‘income’ than what was declared as ‘turn-over’ in the submitted returns.
As for input tax, BURS stated that Prevailing Securities had not provided tax invoices. In their filing affidavit seen by Botswana Guardian, Prevailing Securities noted that they had provided the documents BURS allegedly mentioned as not been provided.
“In the letter dated 17th August 2018, BURS never sought tax as part of the documents it sought from Prevailing Securities. The issue of the tax invoices only came up for the first time in the January 30th 2019 letter. Again, in their errors it is to be noted that, the VAT assessments did not include some of the payments made to BURS.
“For instance, the sum of P119 982.83 paid on the 1st March 2014 was not reflected on the assessment schedule, with the result being that Prevailing Securities had underpaid tax, when this was not so, lawyers have argued. The Respondent (BURS) also levied VAT on unpaid invoices thus subjecting Prevailing Securities to unreasonable tax burden for sums not received,” reads the applicant’s affidavit.
According to Guduli, it is not true that Prevailing Securities understated its income. The position was that Prevailing Securities received two (2) types of income, he said explaining that the first income arose from its ordinary course of business while the other sources came from Non- Income Activities.
Argued the judicial manager “these activities were not tied to the contractual income with different customers. The Non- Income Activities included reversed instalments, dishonoured cheques, reversed stop orders, intercompany fund transfers, temporary loans, insurance claims, funds deposited from other bank accounts of the company to meet expenses, rejected salaries from employees’ bank accounts to mention but a few.”
According to the confirmatory affidavit de