A case study
N$20 million assessed. N$789,456 paid.
A medium-to-large Namibian group had its bank account frozen, its work permits refused and its tender income intercepted. This is what we found, and what we did about it.
The situation
A profitable business, one filing away from stopping
The client is a medium-to-large company with an annual turnover of about N$570 million. It imports and exports, and trades domestically in construction, mining and related activities. Its name is withheld.
The revenue authority flagged it for audit over non-compliance across VAT, income tax, employee tax, and the personal tax of its directors and members. The assessed liabilities came to N$20 million of capital debt, before interest and penalties. The cause was shoddy, partial or absent filing of returns over the previous five years.
What that meant day to day
By the time we were approached, the consequences had stopped being theoretical.
- The bank account was frozen, and roughly N$7 million had already been remitted to the agency under a third-party appointment notice, which is well within its powers.
- Home Affairs refused to renew or approve work permits for the entity's foreign employees, because a permit depends on the firm being in good standing. Those employees faced deportation.
- Government-funded projects were running at the time, and every future payment into the account was caught by the same notice, so it too would be remitted until the debt was satisfied.
That last point is the one that ends businesses. A company can survive a large assessment. It cannot survive an indefinite period in which every dollar it earns is intercepted on arrival.
What we found
The accounts were fine. The tax was not.
Because we had not acted for the entity before, we began with a baseline audit: every financial transaction examined, compared against bank records and against the financial reports its own bookkeeper had prepared, then compared again with what had actually been posted to its ITAS portal.
The findings were stark. The records had not been computed against the specific Namibian tax laws governing each tax type under review. They simply followed accounting principles, IFRS or GAAP, to show the business's financial performance. That is what accounting is for. It is not what a tax return is for.
That single gap produced an assessment of that size across every tax type. The entity had an accountant, in house and external. What it did not have was anyone computing tax.
What we did
Buy room first, then fix the numbers
We engaged the agency and lawfully compelled it to reduce the audit scope from five years to three, leaving aside the mandatory five-year prescription. That was granted.
Under the pay now and argue later rule we then invoked the relevant provisions and arranged a payment plan, so the entity could keep trading while its tax data was untangled. That freed the bank account and the cash flow before the underlying dispute was resolved, which is the order those two things have to happen in.
The substantive problem turned out to be lopsided. The entity had been diligent about its VAT account, which carries the commercial benefit of refunds, and had not been filing income tax returns at all. We lodged an objection with the basis set out, filed every outstanding income tax return, and provided the explanations and proof to support them.
The outcome
From N$20 million to N$789,456.15, and a refund
The bank account was unfrozen. The revised assessment reduced the liability to N$789,456.15, which the entity is paying off at N$50,000.00 a month. It also received a refund of N$1,756,404.56.
The entity is now a month-to-month key account. We handle its core tax services, the reports behind its VAT submissions, regular bank reconciliations, monthly management accounts with an income statement and balance sheet, the information behind its provisional tax returns, its financial statements and its accounting records.
Since then it has been awarded two major tenders by the Central Procurement Board of Namibia worth approximately N$422.7 million, alongside smaller awards from regional governments, public enterprises and municipalities totalling roughly N$134.2 million. It contributes about N$1.5 million a year in corporate social responsibility, and about N$87 million a year in taxes to the government of Namibia.
None of which happens from behind a frozen account.
If any of this is familiar, the first conversation is free. Tell us where you stand, however untidy it is.
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