KRA Froze My Bank Account: What an Agency Notice Means and What to Do

An agency notice is a written order from KRA, made under section 42 of the Tax Procedures Act, telling your bank or anyone else who holds or owes you money to pay KRA directly, up to the amount in the notice. No court is involved. To get it lifted, you pay the tax, make an arrangement KRA accepts, or show that the debt or the notice is wrong.

What the notice allows KRA to do

• It can go to many people. Your bank, a customer who owes you, a tenant or an employer can all receive one: section 42(2).
• It has a ceiling. The amount cannot exceed the unpaid tax, or the tax KRA believes you will not pay by the due date.
• It can reach future money. It also covers money the person may hold later, which is why an account can feel frozen, though section 42 never uses that word.
• Joint accounts are limited. One is caught only if all holders have unpaid tax, or if the taxpayer can withdraw alone, unless it is a partnership account: section 42(4).
• Salary is capped. An employer can deduct at most 20 percent of each pay, after income tax: section 42(3).

Under section 42(14), KRA can issue a notice only if one of these applies:

• You missed an instalment on a payment arrangement.
• You did not object to an assessment in time.
• You did not appeal an objection decision in time.
• You filed a return but did not pay the tax by the due date.
• You did not appeal a Tribunal or court decision.

KRA must also serve you with a copy when it serves your bank: section 42(9).

What your bank must do

• Pay KRA the amount in the notice by the date it states: section 42(5).
• Report a shortfall. If it does not hold enough, it must write to KRA within 14 days giving its reasons. KRA then has 30 days to cancel or amend the notice, or reject the bank’s reply: section 42(6) and (7).

If your bank ignores a notice without reasonable cause, it becomes personally liable and commits an offence: sections 42(13) and 98(1)(g). Paying KRA clears it of liability to you, and KRA must credit the money against your tax: section 42(10) and (11). So your argument is with KRA, not the bank.

What to do

1. Get the notice. If you have no copy, ask your bank and check your iTax email. Compare the amount, tax and periods with your iTax ledger.
2. Check it really is section 42. A preservation notice under section 43 is the true freeze. The money stays put for ten working days, or until the High Court decides KRA’s application. If the court grants an order, you have 15 days from service to ask it to discharge or vary it. Speak to an advocate at once.
3. If the debt is right, pay or apply for a plan. KRA must tell your bank the notice is revoked or amended once you pay or make a satisfactory arrangement: section 42(8). KRA’s payment plan guidelines approve up to six monthly instalments automatically through iTax. Longer plans go to your Tax Service Office, your local KRA office. After the first instalment, you can request the lift with proof of payment. KRA’s stated standard is one working day once conditions are met.
4. If part of it is wrong, reconcile it. Take your proof, such as receipts or an objection decision, to the debt office at your Tax Service Office and ask KRA to amend the notice.
5. If you dispute the assessment, use your objection rights. If you objected in time, show KRA your acknowledgement and cite section 42(14)(b). If you missed the date, you can apply for more time: see how to object.
6. If the notice itself was wrongly issued, get advice quickly. In Mubea Group Limited v KRA (2025), the High Court treated an agency notice as a decision to challenge at the Tax Appeals Tribunal, not through judicial review. An appeal may not pause enforcement on its own, so you may also need to ask for a stay.

If the debt dates from 2025 or earlier and 31 December 2026 has not passed, read our tax amnesty guide before choosing a plan. A plan does not stop interest (section 33(5)), and KRA’s guidelines say a missed instalment can bring the notice back and cost you your tax compliance certificate.

Meanwhile, ask your bank what it is holding and replan your cash flow around it.

What not to do

Do not move money to another account, a relative or a related company to get round the notice.

• KRA can serve a notice on anyone who holds or owes you money, and can require people to report what they hold: section 42(2) and (12).
• Section 43 applies where KRA believes tax has gone uncharged or unaccounted for and you are likely to frustrate recovery. Moving funds can invite that step.
• If you transfer business assets to a related person, that person can become liable for the tax debt: section 46.

Do not ignore it either. KRA can also sell your goods, restrain your property or stop you leaving Kenya: sections 40, 41 and 45.