Tax returns, assessments and payment: filing dates, penalties and types of assessment

A company commenced business on 1 July 2009 and made up its first accounts for 18 months to 31 December 2010. It did not file a return until 31 March 2012. How much penalty does it owe? The exam sets this as a short calculation, and it sits next to questions on the documents a return must carry and the information a stockbroking firm must include.

Behind them all is one chain: register, file the return on time, receive an assessment (of which there are seven kinds), and pay.

This topic covers registration documents, the time for filing the first and later returns, the penalty for late filing, self-assessment, the types of assessment, instalment payment and the penalty for late payment. The previous topic covered the national tax policy, tax amnesty and VAIDS. The next covers objections and appeals.

Key terms in plain English

Syllabus check

This topic is in syllabus area A, introduction to taxation, tax administration and ethics (20% of marks). It covers:

• registration, returns and the time for filing;
• the types of assessment and self-assessment;
• payment, instalments and penalties for late filing and payment.

CAMA 2020 and returns and assessments

The Companies and Allied Matters Act 2020 (CAMA 2020) is the company law of Nigeria. The sections below apply to this topic.

The rules in more depth

Registration and the time for filing

A company registers at the integrated tax office nearest to its registered address. It brings the certificate of incorporation, a certified copy of the memorandum and articles, the particulars of directors (CAC 7), letters of appointment and acceptance of the external auditors and tax representatives, and answers to a questionnaire on the date of commencement, year end, registered address and business address.

• First return: within 18 months of incorporation, or 6 months after the end of the first accounting period, whichever is earlier.
• Later returns: within 6 months of the accounting year end.

Returns, documents and late filing penalty

A company’s return must be accompanied by:

1. the duly completed self-assessment form (IR3C-4COY);
2. audited financial statements, with schedules of assets, receivables and payables;
3. a declaration signed by the Managing Director, a director or the secretary that the return is true and complete;
4. capital allowance computations;
5. the tax computation for the year;
6. evidence of payment of the tax into a designated bank.

A stockbroking firm’s return must also show, for the primary market, the types of offer, services rendered, tax deducted at source and VAT payable, and for the secondary market, the number and value of transactions for each month, commission received or paid, tax deducted at source and VAT payable.

Under section 55 of the Companies Income Tax Act, a company that fails to file pays ₦25,000 in the first month and ₦5,000 for each subsequent month. A director, manager, secretary or agent who connived, neglected or acquiesced is liable to a fine of ₦100,000 or two years’ imprisonment, or both.

Self-assessment and instalments

Under self-assessment, the taxpayer is entitled by law to compute his tax, pay it and file the return with evidence of payment by the due date. The authority accepts the returns and checks that the forms are complete. A company pays in one sum on the filing date, or in not more than six monthly instalments if approved. The application must carry proof of payment of the first instalment.

Benefits: it shortens the time taken to raise assessments, lets the taxpayer pay in instalments, and builds the taxpayer’s confidence to submit to assessment.

The seven types of assessment

Dividends paid out of profits already taxed, out of tax-exempt income, out of franked investment income, or distributions by a real estate investment company are excluded from the dividend assessment.

Late payment

If assessed tax is not paid in time, the company is liable to a penalty of 10% a year of the tax, and interest at the bank lending rate from the due date. Both are payable within one month of the demand notice; failure to pay is itself an offence.

Final and conclusive

An assessment becomes final if no valid objection or appeal is made in time, if the amount is agreed after objection, or if it is determined on appeal. The next topic deals with the objection route.

The tax identification number on every document

Section 10 of the Companies Income Tax Act, as inserted by the Finance Act 2019, requires every company to have a TIN. The company must display it on all business transactions with other companies and individuals, and on every document, statement, return, audited account and letter sent to the revenue authorities, ministries and government agencies.

Section 10(2) requires every bank and financial services provider to ask all companies for their TIN as a condition of opening a bank account. For an account already open at the time of the Act, the bank had to require the TIN within three months of the Act’s passage as a condition of continued operation of the account.

Registration: time and requirements

Under section 8 of the VAT Act, every company must register for tax with the FIRS within six months of commencing business. A company registering submits two letters, one for income tax and one for VAT. The income tax letter states the company’s name, registered office, business address, the precise nature of the business, the date of commencement, the name and address of its bankers, and particulars of major shareholders.

It is accompanied by the certificate of incorporation, the memorandum and articles of association, and Forms CAC 2 and CAC 7. The VAT letter is accompanied by a completed VAT Form 001 and the certificate of incorporation.

A newly incorporated company that applies in writing must also state the nature of its business, its year end, the date it started or that it has not yet started, the names and addresses of shareholders and directors with details of allotments, its auditors and tax consultants if appointed, and its bankers. If the FIRS is satisfied, the company is registered; otherwise it asks for more information or documents.

Unincorporated persons register with the State authority where they live, and a taxable person under the PITA should register within three months of the year by completing the prescribed form. An employer registers as the State authority’s agent for PAYE.

Returns of a company: what to file

Every incorporated company carrying on business in Nigeria files annually, without notice or demand, a self-assessment return in the prescribed form, with audited accounts, tax and capital allowance computations, and evidence of payment of the whole or part of the tax into a designated bank.

Under section 55, the schedule of documents is:

• audited financial statements
• income tax and capital allowance computation schedules
• the completed Companies Income Tax form (IR3C-4Coy)
• the completed tertiary education tax form (4D EDT)
• evidence of payment of companies income tax
• evidence of payment of tertiary education tax

The return carries a declaration signed by a director or the company secretary that it contains a true and correct statement of the company’s profits computed under the Act, and that its particulars are true and complete. For a small company, the service may by notice specify a form of accounts instead of audited accounts (section 55(7)).

Non-resident companies

Under section 55(1A), a non-resident company that derives profit from Nigeria or is taxable under section 13 must submit a return containing:

• its full audited financial statements and those of its Nigerian operations, authenticated by an independent qualified accountant in Nigeria
• schedules of tax computation on the profits attributable to Nigeria
• a true and correct written statement of the profits from every Nigerian source
• the completed self-assessment forms

A non-resident company whose only income is subject to withholding tax as the final tax need not file in that year.

Due dates

Other returns

• Banks: a quarterly return, not later than the seventh day after the return date, of the names and addresses of new customers. Under section 28 of the FIRS Act the quarterly returns also cover deposits above ₦5,000,000 for individuals and ₦10,000,000 for corporate customers. The administrative penalty for not filing, or filing incorrectly, is ₦1,000,000 a quarter (Finance Act 2021).
• Stockbroking companies: within seven days after each calendar month, a return for the preceding month, with the primary and secondary market information described above.

Books and records

Section 63 requires every company, whether or not it is liable to tax, to keep books and records with enough data on all transactions. They must be in English and, for tax purposes, in the format the service may prescribe. If a record is in another language, the company must produce, at its own cost, a translation certified by a sworn translator.

A company that fails to produce a record or book on request pays ₦100,000 in the first month and ₦50,000 for each later month. If the service thinks the records are inadequate, it may by written notice require records in a form and language it specifies, and that direction can be objected to and appealed like an assessment.

Books and records must be kept for at least six years after the year of assessment to which the income relates.

Access to records

Under section 25(4) of the FIRS Act, as amended by section 51 of the Finance Act 2021, the FIRS may deploy technology for administration and information gathering. It must give the taxpayer 30 days’ notice where it intends to access the taxpayer’s information system. A taxpayer who stops the FIRS from accessing its records pays a penalty of ₦25,000 a day for as long as the failure continues.

The taxpayer may state its reasons for refusing, and if the service finds them tenable it may withdraw the notice.

Minimum tax relief and late filing

A company that does not file on time under section 55(2) and claims the relief in section 33(2) of the Act (the reduced minimum tax rate) must pay as a penalty an amount equal to the relief sought (section 55(8)).

Service of the notice of assessment

The FIRS serves or sends the notice of assessment by registered post, courier, email or another electronic means as the service directs, to the company or the person in whose name it is chargeable. The notice shows the amount of total profits, the tax payable, and the place where the tax should be paid.

Collection: time limits for payment

The time limit for payment depends on whether tax is determined by an assessment raised by the FIRS or by a self-assessment filed by the company.

• Self-assessment: under section 77(5), as amended by the Finance Act 2019, the company pays on or before the due date of filing, in one sum or in instalments. If it pays in instalments, it first writes with proof of payment of the first instalment and gets the service’s approval for the number of instalments. The final instalment must be paid on or before the due date of filing. A company that wants to pay in pieces applies in writing before the due date with receipts showing full payment of tertiary education tax and the first instalment of company income tax. After the due date, penalty and interest accrue.
• Assessment by the FIRS: the tax is paid at the place named in the notice within 30 days of service. If the 30 days end after 14 December of the assessment year, any balance is payable by 14 December.
• Objection or appeal pending: collection stays in abeyance until it is decided, but the company pays the provisional tax or the tax not in dispute, whichever is higher. On final determination the service serves notice of the tax payable, due within one month, subject again to the 14 December limit.

Bonus for early payment

Under section 77(5), a company that pays its tax 90 days before the due date under section 55 is entitled to a bonus on the tax paid, as a credit against future taxes: 2% for a medium-sized company and 1% for any other company. Any balance unpaid at the due date attracts interest and penalties.

Currency of payment

Income tax charged on a company is paid in the currency of the transaction, that is, the currency in which the income was earned and paid to the company. A company whose transactions are in a foreign currency pays the tax in that currency.

Enforcement

If a company does not pay an assessed tax, the FIRS may:

1. distrain on the taxpayer’s goods, chattels, bonds or other securities;
2. distrain on land, premises or places owned by the taxpayer; the goods and property may be sold to recover the tax and costs, but only after being kept for 14 days without payment;
3. sue the taxpayer in a court of competent jurisdiction to recover the tax;
4. where the company is a ship owner or charterer in default for more than three months, issue a certificate to the Nigeria Customs Service naming the owner and the tax in default. The certificate authorises Customs to refuse clearance, which means the ship is detained until the tax is paid.

For the ship power the tax must have become final and conclusive, the assessment notice and a demand notice must have been served. The company must have failed or refused to pay in the time allowed.

Adjustments of the filing calendar: a table

Assessment procedures in more detail

Where a company has filed a self-assessment return with audited accounts and the tax computations based on them, the FIRS may accept the return as made if it finds it satisfactory. When the time for filing expires, the FIRS proceeds to assess every company that has not filed. Each type of assessment has its own trigger, and the exam usually gives facts and asks which type applies.

Self-assessment. The taxpayer has the legal right to compute his own tax, pay it and file with evidence of payment by the due date. The FIRS accepts all returns submitted and carries out checks to ensure that all the required information has been entered correctly on the forms. Self-assessment began on 1 January 1996, to run alongside the government assessment for individuals and companies.

Its benefits are that the time taken to raise assessments is shorter, the taxpayer can pay in up to six instalments if approved. The taxpayer is more willing to submit to assessment.

Additional assessment. If the FIRS finds that a company has not been assessed, or has been assessed at less than the amount chargeable, it may, within the year of assessment or within six years after it, and as often as necessary, raise an assessment for the tax or additional tax chargeable.

The effect is that if, within the six years, it finds that tax was unpaid or underpaid for any of those years, it may again look back six years from that point.

Best of judgment (administrative) assessment. The FIRS assesses on its best of judgment in two situations. First, where the company has filed a return with audited accounts and computations, and the authority refuses to accept them as unsatisfactory, it determines total profit itself and raises an assessment.

Second, where the company has failed to submit a self-assessment return and accounts and the FIRS is of the opinion that it is liable, it determines the company’s total profit and raises an assessment.

Jeopardy (protective) assessment. This is raised on the ground of expediency, so that tax is not evaded in urgent situations such as an impending sale or transfer of the business, a taxpayer about to escape to a foreign country, intended remittances to foreign partners, or imminent liquidation.

Assessment on turnover. By section 30, where a company’s business has no assessable profits, or profits that in the FIRS’s opinion are less than might be expected, or where the true profit cannot be readily ascertained, the FIRS may assess on a fair and reasonable percentage of turnover. The result is deemed to be the assessable profit.

Assessment on dividend paid. By section 19, where a dividend is paid out of profit on which no tax is payable, because there is no assessable profit or the assessable profit is less than the dividend paid or proposed, the paying company is charged at the appropriate rate on the dividend as if it were its total profit for the year of the accounts from which it was declared.

The following are excluded (section 19(2), Finance Act 2019):

• dividends paid out of retained earnings that came from profits taxed under CITA, the Petroleum Profits Tax Act or the Capital Gains Tax Act
• dividends paid out of tax-exempt income
• franked investment income
• distributions by a real estate investment company to shareholders from rental or dividend income received for them

The exclusion applies whether or not the profits arose in the year of payment.

Back duty assessment. Where a taxpayer or his representative has committed fraud, wilful default or neglect in connection with the tax assessed, the FIRS may assess additional tax to make good the loss. There is no time limit, but the Tax Appeal Tribunal in Benin has restricted the power to cases where fraud, wilful default or neglect has been established by a tribunal or court.

Further examples

1. (a) Best of judgment: no return has been submitted.
2. (b) Jeopardy: an impending sale and remittance abroad make the matter urgent.
3. (c) Turnover: losses are less than might be expected from the business.
4. (d) Dividend: the dividend is taxed as total profit at the company rate.

1. It may raise an additional assessment within the year or six years after 2022, so until the end of 2028.
2. If during that period it finds under-payment in 2023, the six years for 2023 run until 2029.

1. 30 days from 20 November is 20 December.
2. That is after 14 December, so the balance is payable by 14 December, only 24 days after service.

1. The tax not in dispute is ₦5,000,000 − ₦2,500,000 = ₦2,500,000.
2. The company pays the higher of ₦4,000,000 and ₦2,500,000, so ₦4,000,000.
3. The balance waits until the objection is decided, and is then payable within one month of the notice.

1. The bonus is 2% of the tax paid = ₦160,000.
2. It is available as a credit against future taxes. A company that is not medium-sized would receive 1%, which is ₦80,000.

1. First month: ₦100,000.
2. Each of the next two months: ₦50,000, so ₦100,000.
3. Total up to the fourth month: ₦200,000.

1. The penalty is ₦25,000 for each day the failure continues.
2. 10 days × ₦25,000 = ₦250,000.

A filing calendar for a company with a December year end

1. 31 December: year end. The company closes its books and begins the audit.
2. By 30 June: files the return with audited accounts, computations and forms, and pays any balance. An early payment bonus needs payment by about 1 April, which is 90 days before the due date.
3. Before 30 June: if it wants to pay by instalments, applies in writing with proof of payment of the first instalment, and the last instalment must be paid by 30 June.
4. Each month: files VAT and remits withholding tax by the 21st or as the law requires.
5. Every year: keeps books for six years after the relevant year of assessment.

Tax avoidance and evasion in the chapter

The course materials place a discussion of tax avoidance and evasion in the same chapter, because the filing and assessment rules are the tools that detect them. Evasion often starts with failure to file, and the FIRS answers it with best of judgment and back duty assessments. The topic on tax avoidance, evasion and planning deals with the cases and the comparison.

Typical exam questions and the answer outlines

1. Registration, time for the first and later returns, and the penalty for late filing. Documents: certificate of incorporation, certified memorandum and articles, Form CAC 7, letters of appointment and acceptance of the auditors and tax representatives, and answers to the questionnaire on the date of commencement, year end, registered address and business address.

Time: the first return within 18 months of incorporation or 6 months after the first accounting period, whichever is earlier; later returns within 6 months of year end. Penalty: ₦25,000 in the first month and ₦5,000 each later month, and a fine of ₦100,000 or two years’ imprisonment or both for a director, manager, secretary or agent who connived or neglected.

2. When does an assessment become final and conclusive? When no valid objection or appeal is lodged within the time allowed, when the taxpayer agrees the amount of total profit after objection, or when the amount is determined on appeal.

3. How does self-assessment work and what are its benefits? The taxpayer computes his liability, pays it and files the return with evidence of payment on or before the due date. The company may pay in up to six monthly instalments if approved, with proof of payment of the first. Benefits: faster assessment, payment by instalment, and confidence in submitting to assessment.

4. Types of assessment, penalty for late payment, and back duty assessment. Name the seven assessments and give one line each; give the penalty of 10% a year plus interest at the bank lending rate, payable within a month of the demand notice; and explain that back duty arises from fraud, wilful default or neglect, with no time limit.

5. Ten transactions for which a tax clearance certificate is required. Government loan, vehicle registration, firearms licence, foreign exchange remittance, certificate of occupancy, award of government contracts, approval of building plans, trade licence, transfer of real property, and import or export licence.

Short answer facts

• If a company’s transactions are in a foreign currency, tax is payable in that currency.
• An assessment where the taxpayer has not filed or registered and the FIRS thinks he is liable is a best of judgment assessment.
• Section 101(4) of CITA requires a tax clearance certificate for the listed transactions, including registration of motor vehicles.
• An assessment raised to stop a taxpayer escaping abroad is a jeopardy or protective assessment.
• The system that lets a taxpayer compute his tax, file and pay is self-assessment.

Multiple-choice facts

• A tax clearance certificate does not disclose the TIN of the Managing Director.
• A bank files its quarterly return not later than the seventh day after the return date.
• The time for paying undisputed tax raised by the FIRS is 30 days from service of the notice.
• The early payment bonus of 2% is for a medium-sized company, and 1% for others.
• The daily penalty for blocking FIRS access to records is ₦25,000.

Typical mistakes by taxpayers that lead to assessments

The most common causes of additional and best of judgment assessments are failure to file, filing without audited accounts, unsupported deductions, income left out of the computation, and failure to register. A company that files late loses the chance of an early payment bonus and may lose the minimum tax relief.

A company that does not keep books for six years cannot support its claims if the FIRS looks back, and it faces penalties for failing to produce them. The best protection is to file on time with complete documents, keep full records and pay what is due by the due date.

How the pieces fit

Registration gives the company a TIN. The TIN goes on every document, including the return. The return, with audited accounts and computations, is filed by the due date. If the FIRS accepts it, the self-assessment stands. If not, the FIRS raises a best of judgment or additional assessment. The taxpayer then pays within the period, objects if he disagrees, and the objection and appeal route in the next topic applies.

Throughout, the books and records support each step, and enforcement follows if tax stays unpaid after the demand notice.

More on filing: small companies, instalments and minimum tax

Section 55(7) allows the service to prescribe a simpler form of accounts for small companies instead of audited accounts, so that a small company is not forced to carry the full cost of an audit for its return. The filing date is the same.

If a company asks to pay by instalments, it must write before the due date with receipts showing full payment of tertiary education tax and the first instalment of company income tax. If the last instalment is not paid by the filing date, interest and penalty run from that date on what is outstanding.

1. Before the due date it pays the tertiary education tax of ₦1,200,000 in full and the first instalment of ₦2,250,000, and applies in writing with the receipts.
2. The remaining three instalments of ₦2,250,000 each must be paid so that the last falls on or before the filing date.
3. Any part still unpaid after the filing date bears the penalty of 10% a year and interest.

1. Under section 55(8), it pays a penalty equal to the relief sought: ₦400,000.
2. It also pays the monthly late filing penalty of ₦25,000 for the first month and ₦5,000 for each later month.

1. The administrative penalty is ₦1,000,000 for each quarterly return (Finance Act 2021).
2. Total for two quarters = ₦2,000,000.

Questions to ask before filing

1. Is the company registered, with a validated TIN?
2. Are the audited accounts signed by the directors?
3. Are the tax and capital allowance computations complete, and do they agree with the accounts?
4. Are the tax forms completed and signed with the declaration?
5. Has the tax been paid, or has the instalment application been made?
6. Are the books and records ready for six years’ retention?

Who files what, and when: a summary

• The company files its return, accounts and computations within six months of its year end.
• The employer files the annual PAYE return by 31 January.
• A bank files its quarterly return within seven days of the quarter end.
• A stockbroker files monthly within seven days of the month end.
• Every person keeps records for six years.

One-line reminders

Returns must be signed and show a TIN; the Tribunal deals with disputes; the Tax Clearance Certificate follows three years of returns.

The position from 2026

The Nigeria Tax Administration Act 2025 took effect on 1 January 2026 and governs registration, returns, assessment and payment, and the Nigeria Revenue Service replaces the FIRS. Once an assessment is issued, the taxpayer must pay within 30 days or object. Use the old rules above for periods ending before 2026.

Worked examples

1. The first month of default is July 2011: ₦25,000.
2. Each later month, August 2011 to February 2012, is 7 months × ₦5,000 = ₦35,000.
3. Total penalty = ₦60,000.

1. 18 months from incorporation = 31 August 2025.
2. 6 months after the end of the first period = 30 June 2025.
3. The earlier date is 30 June 2025.

1. The dividend is treated as total profit.
2. Tax = 30% × ₦6,000,000 = ₦1,800,000.

1. Penalty = 10% a year × ₦2,000,000 = ₦200,000.
2. Interest is added at the bank lending rate for the period.

How to score full marks

• List the six items filed with a return, and one mark each is usual.
• Find the first default month from the due date, then count the months to the filing date.
• Name the type of assessment from the facts: a departing taxpayer is jeopardy, no returns is best of judgment.
• Quote the six years for additional assessment and no limit for back duty.

Common mistakes in the exam

• Using the wrong due date for the first return.
• Charging ₦25,000 every month instead of ₦5,000 after the first.
• Mixing up best of judgment and jeopardy assessments.
• Forgetting the six-year limit on additional assessments.

Quick revision

• First return: 18 months from incorporation or 6 months from period end, earlier.
• Later returns: 6 months from year end.
• Late filing: ₦25,000 then ₦5,000 a month.
• Seven assessments. Late payment: 10% a year plus interest.
• 2026: pay or object within 30 days.

Practice questions

Questions 1 to 10 are multiple choice. Questions 11 to 13 are written. Try each before opening the answer.

Model answers

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