Policy Note · Best-judgment assessments and the records that defeat them
Where your records are missing the Commissioner may estimate your tax; where they are complete it may not.
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When a taxpayer fails to keep or produce proper records, the Commissioner may assess on best judgment, often by the banking method, which treats bank deposits as income unless the taxpayer shows otherwise. The method is a substitute for records, and it is permitted only where the records are absent or unreliable.
Where primary records exist and are produced, the authority must assess on them, and an estimate raised in the face of complete books does not survive review. The way to displace a best-judgment assessment is to produce the documents it stood in for, reconciling each deposit to its source and setting capital receipts, sale proceeds, refundable deposits and loans, apart from income.
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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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Tax and financial judgement · 4 min read · Paid
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Tax and financial judgement · 4 min read · Paid
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Tax and financial judgement · 4 min read · Paid