I have been hearing stories about not so pleasant interactions that others have had with the taxman. I had never really thought I would be in the same boat. Well, in the last ten days, this has changed. I even remembered the late Lucky Dube’s song, “Taxman.”

It is a wonder I had the presence of mind not to sing the lyrics of “Taxman” during one of the follow-up calls I got from the taxman – as in, before you query our returns, “you gotta tell me now Mr. Taxman (what have you done for me lately?)…”

Sanity prevailed and my humming of “Taxman” I did silently. But, I though I should share my experience, in the hope that it inspires in you, dear reader, to enhance your appreciation of the significance of keeping good, accurate and accessible financial records. That was our saving grace.

Compliance Advisory for Return Period 2021

On Tuesday, 15th August 2023, on behalf of CPAR Uganda, in my capacity as Managing Director, I received a caution, advisory and threat email from the Uganda Revenue Authority (URA). It notified as follows:

“We have reviewed your return and noted the expenses claimed exceed 75% of the rental income generated.

The purpose of this letter is to advise you to amend your return and adjust to correct where applicable. Do so within 5 days from the date of receipt of this mail and pay the resultant tax.

Please note that failure to address the issue within 5 days will lead URA to generate additional assessments and penalties thereof, as per Sec 23(1)(c) of the Tax Procedures Code Act, 2014. This will done without further reference to you.”

URA Domestic Taxes Officer Namanya

I despaired. 19 months later and when we had filed returns for another financial year, URA is querying our returns for 2021? I was flummoxed. Frankly I did not understand what exactly URA wanted from me. So, I emailed: “I am not quite sure what you refer to. Please email to me the details.

URA responded:

“The email requires you to support the claimed rental expenses since they exceed rental income. And in case you have no supporting documents you should amend the returns. Otherwise, all expenses will be disallowed and taxed as undeclared income.”

URA Domestic Taxes Officer Namanya

Submitting Supporting Documentation to URA

I let Officer Namanya know I had understood. That I would have my assistant extract the relevant vouchers; and I would scan and email them to him. CPAR Uganda, after all, keeps excellent financial records, including supporting documentation. Its finance policy, in fact, stipulates:

“Any payment authorised without sufficient documentation may be recovered from the authorising officer or cheque signatories.”

CPAR Uganda Finance Policy, 2013

2018 CPAR Uganda Books of Accounts delivered to Carr Stanyer Sims & Co for External Auditing.

Appreciating the significant volume of supporting documentation that CPAR Uganda has, I determined that the fastest and less costly way of sharing supporting documents with URA would be via Google Drive. And so, I reviewed, extracted, scanned and uploaded the first batch.

I email shared with Officer Namanya the Google Drive link and with the promise that I was going to continue to scan and upload the rest. Then came another email from URA that surprised me:

“I have seen the links, however, as URA staff we do not have official google accounts. I would like to request you scan and send invoices, receipts via email; or physically deliver the documents to the rental tax office Nakawa.”

URA Domestic Taxes Officer Namanya

Again, I was flummoxed. The Google Drive link was sent to the Officer’s official email address with URA. It is the only email address through which he would have had access to the folder on Google Drive.

He would have been able to review the supporting documentation, without even downloading any; thus saving URA an unnecessary expenditure, in my view. I digress, back to the story. I realized that it would be frustrating for me to argue the merits of using Google Drive with Officer Namanya.

I embarked on the more laborious and the more costly manner of sending the supporting documents via email. I had to send them in six different batches and I did so within the time frame – it too me two days.

Take not though, the URA caution, advisory and threat combined, came at a time when I was slam in the middle of working on another significantly urgent and time-bound CPAR Uganda matter that only the Managing Director is mandated to do.

I knew that there was going to be need for me in the next seven days or so to do overtime. In my role as Managing Director, I am the CPAR Uganda chief accounting officer and so it was my duty, as well, to handle the URA query. The last seven days it has been hard and long work hours for me, to the extent that my right had hurts significantly.

Typing, using calculator, and using the staple remover to remove staples, extract receipts, etc. was not fun at all. But, what is important is that I was able to send to URA all the requested supporting documentation. And URA was satisfied of the legitimacy of CPAR Uganda’s declaration.

Indeed, the matter of the URA query into the rental income returns for 2021 of CPAR Uganda was resolved, in a timely manner. Only slight error that CPAR Uganda had made in filing its returns was lumping income and expenses from all its properties – four learning centres – under rental income.

It was agreed with URA that CPAR Uganda should amend its returns and extract the expenses on two of its centres and transfer them to another of CPAR Uganda’s finance components – the Business Component. This will be done next week.

A bit About My learning From This Incidence

I deduce from the URA emails an expectation that financial return declarations are without supporting documentation. Folklore, in fact, has it that this is a status quo that is allegedly sometimes used for personal gain by unscrupulous agents – some URA officers turned into ‘individual tax fixer’ and ‘cheating tax payers’.

Often times, allegedly, resulting in significant loss of revenue to the the ‘cheating tax payer’ and to the State. For the ‘cheating tax payer’, folklore has it, that some have apparently ended up paying a bribe to the ‘individual tax fixer’ to make it go away.

Apparently, sometimes, the bribe that the ‘cheating tax payer’ has paid is higher than the genuine taxes they would have paid if they had accurate financial records. For the State, the loss is in form of taxes diverted to pay bribes to the ‘individual tax fixers’.

Keeping accurate financial records isn’t important only for the purpose of taxation. Good and accurate financial records are important to facility good financial decisions.

Bookkeeping is a skill that non-finance people can easily learn. I learnt all I know about bookkeeping and financial management on the job. And every opportunity that I get, I mentor those whom I work with in bookkeeping. All one needs is to be open to learn.

Call to Action

A reason why empowering disadvantaged enterprising young women with financial literacy is a major component of CPAR Uganda’s planned “Uganda Women’s Economic Empowerment Loan Fund” project.

Fundraising is ongoing and we ask you to support this worthy cause that is intended to give disadvantaged enterprising young women in Uganda access to affordable finance and financial literacy. This is so that they may be able to identify, start and operate successful income generating enterprises.

They will generate sufficient income to improve their livelihoods and be able to afford the right quality and quantity of food for their families; and also to provide their families their other basic needs.

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