Introduction
Client B is a sourcing and supply chain management company that provides catering, janitorial, and other related services to various clients. The GRA carried out a tax audit covering 3 financial years, issued an assessment of GHC 2 million and gave the company 30 days to respond.
As the client was in negotiation with an investor, the assessment caused concern in the company. To help it respond to the tax assessment, the company enlisted the services of SCG Chartered Accountants.
The challenge
- The client engaged us after the GRA issued the audit. B was anxious because he was negotiating a sale of the business.
- Because of most data being in digital form, the client faced challenges in obtaining the information needed to respond to the audit findings.
- Most of the liability assessed was for withholding taxes. Because of the type of business, most of the purchase is from the market for cash, where it is not possible to withhold taxes.
- The assessment would be final if the client did not respond within 30 days.
The resolution
Our tax team sought the help of the data team to get, analyze, and create the evidence to respond to the audit findings.
The data team used data tools to access 100% of the data stored in their accounting database quickly and efficiently. They analyzed data representing over 30,000 lines of transactions in expenses of over GHS 21 million and payment to over 50 vendors of over GHS 26 million, all relating to the audit.
The quality of data and evidence they generated enabled the tax team to respond to the audit finding within the 30-day deadline to respond.
Results
We agreed on an assessment of GHC 0.9m, saving the client GHC1.1m.
The savings came from:
- Income tax – GHC 0.62m.
- Indirect taxes – GHS 0.48m.
- Unclaimed rebates and deductions – we identified over GHS 1.1 million in tax savings that were related to unclaimed rebates and deductions.
The insights gathered have benefited the bottom line and have been a catalyst for changes in its operations.
- The Data Analytics report provided baseline metrics for analyzing the root cause of the error and implementing corrective measures.
- In addition, the company strengthened account payable policies and controls by implementing a vendor management process and adopting a regular vendor account reconciliation schedule.
- The new owners kept SCG as their tax advisors.
James Etu
