REQUIREMENTS OF A VALID DEFAULT TAX ASSESSMENT NOTICE

The Tax Procedures Act prescribes four forms of tax assessment. These are: self assessment, default assessment, advance assessment and amendment assessment.

In the case of default assessment, Section 29 of the Act  provides that where a taxpayer fails to submit a tax return for a reporting period in accordance with a tax law, the Commissioner may, based on information available to him or to the best of his/her judgment make an assessment (default assessment) of:

1. the tax (including nil amount) payable by the taxpayer;
2. the amount of deficit in the case of a deficit carried forward under the Income Tax Act, for the period; or
3. the amount of excess in the case of excess of input tax carried forward under the VAT Act, for the period.

The Commissioner is required to notify the taxpayer of the assessment in writing. The notice should specify the following:

1. the amount of tax assessed as tax or the amount of a deficit or excess of input tax carried forward;
2. the amount assessed as late submissions penalty and any late payment penalty payable in respect of the tax, deficit or excess input tax assessed;
3. the amount of any late payment interest payable in respect of the tax assessed;
4. the reporting period for which the assessment relates;
5.  the due date of payment of the tax, penalty and interest; and the manner of objection.

The due date for payment should not be less than 30 days from the date of service of the notice.

The assessment under Section 29 should not be made after five years after the last date of the reporting period for which the assessment relates. However, in case of fraud, gross or willful neglect, or evasion the five years limitation does not apply.