Former Nairobi Governor Evans Kidero on Tuesday obtained a court order barring the Kenya Revenue Authority (KRA) from seizing Sh427 million in his accounts at NCBA Bank over unpaid tax.
Mr Kidero rushed to court after the KRA ordered NCBA to wire the millions to the taxman’s accounts following a High Court judgment of February 7 that found the former governor under-declared taxes.
He says in court documents that the KRA wrote to the bank on February 8, demanding the Sh427 million in the middle of an appeal over the High Court judgment.
“The tax claimed is grossly excessive, punitive and the respondent (KRA) would suffer no prejudice should stay of execution be granted,” he says.
Justice David Majanja granted him the temporary reprieve so that he could pursue an appeal.
The KRA claimed that the former governor had not paid tax of Sh427 million, in a period of five years.
The authority snooped on the former governor’s bank accounts and rich list of high-end properties, gleaning information about the rental income that was flowing in.
His land and buildings are estimated to be worth at least Sh9 billion, according to the anti-graft agency, making him one of Kenya’s wealthiest people. He has denied the claims, maintaining that the properties are worth Sh564 million.
The KRA has hinged its bank accounts espionage on the Tax Procedures Act (TPA), which compels third parties to share information with the taxman.
This has seen the KRA issue agency notices, which have led to the freezing of bank accounts and the order similar to the one sent to NCBA Bank to remit tax directly to the authority from clients’ accounts.
Lawyers and accountants reckon that the taxman has stepped up its surveillance on bank accounts as it seeks to match the flow of cash against tax remittances.
Bank clients have always believed that their account details are secret and beyond the prying eyes of the taxman.
The KRA said it did an audit of Mr Kidero’s financial and business affairs in 2016 from January 2011 to December 2015.
The taxman alleged that he banked Sh702 million in 2011, Sh1.4 billion in 2012, Sh180 million in 2013, Sh306 million in 2014 and Sh102 million in 2015.
The KRA also went for his properties – Great Rift Valley 91A and 91B which it valued at Sh50 million, a residential home in Muthaiga valued at Sh300 million, Rosslyn Estate house at Sh90 million and Vista Investment Limited, which is rented and valued at Sh65 million.
Mr Kidero opposed the assessment and said his spouse, Dr Susan Mboya, had declared rental income of the same amount the KRA was demanding.
He further defended the millions of shillings that flowed through his accounts, saying it was part of contributions received from well-wishers and friends for his campaigns ahead of the 2013 General Election.
The court, however, faulted him for failing to separate his personal account from the campaign kitty.
The KRA says in court documents that it did an assessment on Mr Kidero’s accounts after tracking his financial dealings and arrived at unpaid tax of Sh680.9 million between January 2011 and December 2015, inclusive of penalties and interest.
The amount was reviewed to Sh427 million after the former governor contested the figure.
Mr Kidero has since moved to the Court of Appeal, saying the court based its judgment on amounts that the KRA had admitted were erroneous.
“That as per the statement of facts dated 17.02.2017, the respondent (KRA) sought an amount of Sh220,233,725 being the income tax, interest and penalty. This was after admitting several errors in its original assessment,” he says in an affidavit.
The court, he says, subjected a residential home in Muthaiga and Rosslyn Estate to tax yet the KRA had said it had no claim on the high-end properties.
The case will be heard on March 1.
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