Manuchar Kenya Lost Its Bid to Appeal Two Years Late, and Wrong Advice Was No Excuse
- Case
- Manuchar Kenya Limited v Commissioner of Domestic Taxes
- Decided by
- High Court of Kenya, 10 August 2020
What happened
A KRA audit of Manuchar Kenya Limited led to assessments of KES 18,902,123 in corporation tax and KES 6,529,054 in VAT, issued on 17 March 2016. The company took the dispute to the Tax Appeals Tribunal and lost.
It lodged a Notice of Appeal on 25 April 2018, showing that it meant to go to the High Court. But it did not file the appeal itself within the time allowed, even though the Tribunal supplied certified copies of the proceedings and judgment by letters in May and November 2018.
On 11 June 2020, the company asked the High Court for more time. Its finance manager explained that the company had received improper advice, and that external counsel later told it, during a routine audit, that it had a very good appeal. It also asked the court to stop KRA enforcing the assessments.
What KRA said
KRA opposed the application. It said the judgment was over two years old, that the company had always known it could appeal, as its own notice showed, and that the explanation was not good enough.
What the Court decided
Justice D. S. Majanja dismissed the application, with costs to KRA.
The parties agreed that the court could extend time, as a matter of its discretion. But the judge said the right to appeal is not open ended, and a party seeking to revive it must give a reasonable explanation for the delay.
The company could not. It had known about a substantial tax liability throughout, and given the amount, the judge said it would have sought a second legal opinion. Fresh advice two years later did not help. The ruling quoted an earlier Court of Appeal decision: “giving wrong advice cannot be a ground for extension of time”.
Because the company failed to explain the delay, the court refused to exercise its discretion in the company’s favour, and did not give it more time to appeal.
What this means for your business
- Diarise the deadline the day a decision arrives. Each stage of a tax dispute has its own time limit, from objecting to an assessment to appealing a judgment. Ask your adviser for the exact last date in writing.
- Do not stop at the notice. A Notice of Appeal only shows you intend to appeal. Here, the appeal itself was never filed in time, so name one person to follow it through.
- Question advice early. If a large sum is at stake and the advice is not to appeal, get a second opinion while time is still running.
- If you are late, apply at once. Explain the delay honestly and in full. The court decides each application on its own facts, so more time is never certain.
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A short summary for general information, not legal advice. Read the full decision before relying on it.