November 28, 2020 In Tax Practice


The Tax Appeal Tribunal (TAT), sitting in Benin, on 8th October, 2020, handed out a ruling in the appeal of Citibank Nigeria Limited v. Rivers State Board of Internal Revenue enunciating the law that tax authorities cannot assess taxpayers beyond 6 years from the date of assessment as regards to Pay as You Earn (PAYE) taxes.

The TAT held, inter alia, that the RBIR cannot carry out a PAYE tax assessment or investigation on back-duty taxes beyond six years except where fraud, willful default or neglect on the part of the taxpayer has been established. The TAT further held that the onus to prove that a taxpayer has committed fraud, willful default or neglect lies on the tax authority that is alleging that the taxpayer has committed such offence and only the Tribunal or a court of competent jurisdiction can determine that fraud, willful default or neglect has actually been committed by the taxpayer.


Sometime 2018, the RBIR, wrote the Citibank informing it of its plans to conduct a back-duty PAYE tax investigation covering the periods of 1999 to 2017. The bank promptly responded and informed the authority that the necessary information for the period sought to investigate cannot be accessed stating that under Section 332(2) of the Companies and Allied Matters Act CAP C20 LFN 2004, it is only obligated to keep records of documents for a period of six years.

Notwithstanding the position of the Citibank, the RBIR on 16th September 2018, issued a BOJ assessed of about ₦303,956,415.36 (Three Hundred and Three Million Nine Hundred and Fifty Six Thousand, Four Hundred and Fifteen Naira, Thirty Six Kobo), to the Bank on the PAYE taxes for the periods of 2006 to 2017. Citibank objected to the assessment on 16th October 2018. However, the RBIR sent a demand notice on 29th November, 2018 stating that the tax assessment was final and conclusive. Thereafter, Citibank appealed to the TAT seeking to set aside the assessment and restrain the RBIR from assessing it to any further PIT for the period covering 2006 to 2017.

On the issue of finality and conclusiveness of the assessment, the Citibank argued that the BOJ assessment was objected to within the stipulated period of objection under the law. The Bank further argued that the assessment ought and should be set aside on the ground that in the absence of fraud, willful default and neglect in line with Sections 54 and 55 of the PIT Act CAP P8 LFN 2004, any alleged back-duty PAYE tax assessment exceeding the six years period allowed under the law is a nullity.

On the other hand the RBIR relied on Section 55(2) of the PITA to submit that was more geared towards the establishment of a suspicion of guilt for fraud, willful default and neglect as opposed to a conviction.

The Tribunal however ruled entirely in favour of Citibank setting aside the said BOJ assessment by the RBIR and further restraining the RBIR from assessing Citibank to further PAYE taxes for the periods 2006 to 2017. In reaching its decision, the TAT considered Section 54(5) of the PIT Act and stated that tax authorities are limited to a period of six years and cannot go beyond that period to carry out back-duty PAYE investigations, except where the taxpayer has committed fraud, willful default or neglect as provided in Section 55(2) of the PIT Act. The Tribunal further cited a number of judicial authorities to hold that the obligation to establish/prove fraud, willful default or neglect in order to open a tax investigation beyond the limitation period of six years is on the tax authority. Thus, the Tribunal held that since the RBIR has been unable to prove that Citibank has committed fraud, default or willful neglect, it cannot assess the Bank to PAYE taxes beyond the six-year limitation.

In responding to the RBIR’s assertion that the intention of the lawmakers in Section 55(2) is geared towards the establishment of a suspicion of guilt as opposed to a conviction, the Tribunal made reference to Section 36(5) of the Constitution of the Federal Republic of Nigeria, 1999 and stated that “an accused person is innocent until proven guilty“.

On the issue of the use of the RBIR’s “Best of Judgment” as a basis for the alleged liability of Citibank, the Tribunal highlighted the powers of the tax authorities to issue BOJ assessments under Section 55 of the PIT Act and stated that such powers must be exercised reasonably. The Tribunal further held that in line with Sections 41, 54 and 55 of the PIT Act, the BOJ assessment by the RBIR should have provided a year by year liability to culminate in a total tax liability instead of a lump sum figure.

Based on the foregoing, the Tribunal held that the RBIR had been unable to prove its allegation of under remittance of PAYE taxes by Citibank and therefore ruled in favour of the Bank.


1.       While the Six (6) years Rule of record keeping applied to Companies, the position of the law is further reiterated that a tax authority cannot assess a taxpayer to taxes under the PAYE scheme for periods beyond six years prior to the date of assessment.

2.       The Six (6) years rule still has an exception, particularly where the taxpayer has not been found guilty of fraud, willful default and neglect by a tribunal or court of competent jurisdiction in connection with the tax liability assessed.

3.       By the definition and categorization of the Court or Tribunal as the only institution to determine fraud, willful default and neglect, the Tribunal by has obviously put an end to the arbitrary use of the exceptional conditions of fraud, willful default and neglect by tax authorities to go beyond Six (6) years limitation period. 4.       Clearly the BOJ is not automatic; same is subject to review by an early notice of objections by taxpayers.


The contents of this opinion are meant for the general information of our clients and friends and do not amount to legal advice. All enquiries on the subject may be made to any of:;;

Leave a Reply