Lecture 16 Β· Highlands Mineral Water separated the penalty from the forfeit.
π»ππ πͺπππ πΉπππ: A drinks maker often filed its VAT returns late and paid the penalties. KRA also disallowed the input tax in those returns, claiming KSh 155.4m. The High Court held that late filing earns a penalty but does not forfeit the right to deduct.
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The case
Highlands Mineral Water Limited made drinking water, juices and energy drinks. It often filed its VAT returns late and paid the penalties. A compliance check in September 2017 covered January 2014 to April 2017. In November 2017 KRA found that input tax claimed in late returns was time-barred under section 17(2) of the VAT Act and demanded KSh 155,402,525, including penalties and interest.
KRA's reading was that where a return is filed late, the six-month window closes on the filing date. Any invoice more than six months old when the return is filed is lost, unless the Commissioner approved the late filing in advance. iTax was programmed to reject such claims, and the Tax Appeals Tribunal had upheld the practice. It did so again here, dismissing Highlands's appeal on 31 March 2020.
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Precursor is published by the FinTech Association of Kenya and exercises independent editorial judgement under the Editorial Independence Charter. This article is labelled Precursor Executive Classroom, which marks commercial material. Knowledge on Tax and financial judgement.
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