The pre-investigation steps are crucial for a high-yielding

process
Pre-investigation
step Description Responsible Duration Output
1 ▪ Case is triggered for investigation following the ▪ Investigation ▪ 1 day ▪ Validated investigation case
Investigation triggers set out in guidelines unit
trigger ▪ Head of investigation approves case
2
▪ Request file from field office ▪ Investigation ▪ 2 ▪ Investigation workplan
▪ Review file to extract key information (years and areas team lead weeks ▪ Circularization letter
Planning to focus on) dispatched
▪ Launch external request on taxpayer
3
▪ Draft notification letter and get sign off from Head of ▪ Investigation ▪ 1 day ▪ Proof of service
division team lead
Notify
taxpayer ▪ Confirm TP address and dispatch letter to taxpayer
4
▪ Conduct detailed desk review on taxpayer file ▪ Investigation ▪ 2 ▪ Taxpayer risk profiling
including review of available external day
Initial desk team lead weeks
▪ Create risk profile with key focus areas
profiling
5
▪ Hold meeting with taxpayer on FIRS premises ▪ Investigation ▪ 1 day ▪ Meeting
Pre- ▪ Probe taxpayer on key focus areas identified from team lead
investigation desk review
meeting
6
Pre-investi- ▪ Prepare minutes of pre-investigations meeting ▪ Investigation ▪ 1 day ▪ Agreed pre-investigation
gation immediately after meeting and dispatch to TP team lead meeting notes
meeting
7 report
▪ Conduct further desk review on taxpayer based on ▪ Investigation ▪ 7 days ▪ Initial case report
documents submitted and external data collected team lead
Desk review

Federal Inland Revenue Service

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The investigation process should result in a fully substantiated
interim report and proposed assessment
Pre-investigation
step Description Responsible Duration Output
1 ▪ Introductory meeting on taxpayer services reiterating ▪ Investigation ▪ 1 week ▪ Investigation findings and
Conduct field focus of field investigation team key documents
investigation ▪ Verify assets
▪ Check physical and electronic records
▪ Validate initial case findings
▪ Obtain necessary documents
▪ Conduct pull out meeting

2
Prepare
▪ Prepare report of field investigation (2 days) ▪ Investigation ▪ 4 days ▪ Interim report
report and ▪ Division head reviews interim report(2 days) team lead
compute
taxes
3 ▪ Get signoff on interim report and dispatch to taxpayer ▪ Investigation ▪ 1 day ▪ Interim report sent
Issue interim team lead
report

Federal Inland Revenue Service

2
Adhering to clear timelines and outputs will help drive
reconciliation compliance …
Reconciliation
step Description Responsible Duration Output
1 ▪ TP receives interim report from investigation team ▪ TP ▪ 1 week ▪ Delivery receipt
Receipt of ▪ TP prepares response to queries raised
interim report

2
▪ TP and investigation team review queries from interim ▪ Division Head ▪ 1 day ▪ Specific list of documents
Reconciliation
report ▪ Team Lead, ▪ Deadline
meeting ▪ Agreement on specific documents TP must provide to
resolve outstanding queries
3
▪ TP puts together documents requested by ▪ TP ▪ 1 week ▪ Submitted documents
Collation/ investigation team
submission
of supporting ▪ TP submits documents to investigation team
4 docs
▪ Review of documents to resolve outstanding queries ▪ Investigation ▪ 1 week ▪ Outstanding query list
Review of ▪ Hold second reconciliation meeting team
supporting
documents
5
▪ TP to submit additional documents ▪ TP ▪ 1 week ▪ Additional documents
Collation of
additional
documents
6
▪ Investigation team reviews documents to resolve ▪ Investigation ▪ 1 week ▪ LOI sent
Resolution of additional queries team lead
queries ▪ Letter of intent is prepared and dispatched to taxpayer
7
▪ Hold final reconciliation meeting with taxpayer if ▪ Investigation ▪ 1 week ▪ Assessment raised
Raise necessary team lead ▪ Assessment registered with
assessment ▪ Raise assessment TO

Federal Inland Revenue Service

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… and allow for a more stringent, results-oriented dispute
resolution process
Reconciliation
step Description Responsible Duration Output
1 ▪ TP receives additional assessment from investigation ▪ TP ▪ 30 days ▪ TP acceptance / dispute
Receipt of team
additional
assessment
▪ TP prepares response to new assessment
2
▪ In case of dispute: Dispute resolution committee to ▪ Dispute ▪ 2 ▪ Notice to amend / Notice of
Dispute review case and decide if raised assessment is fair Resolution weeks refusal to amend
Resolution Committee
Review
3
▪ TP issued Notice of refusal to amend assessment ▪ TP ▪ 2 ▪ Payment of outstanding
Notice of ▪ Tax, Interest and Penalties start falling due weeks amount
refusal to
amend
4
▪ Case is moved to RPP to track payments and flag for ▪ TP ▪ 1 day ▪ Payment
Move to RPP debt ▪ Reminders
to track ▪ Investigation team also follows up with taxpayer on
payment
payment

Federal Inland Revenue Service

Investigation Process
Core investigation process is focused on fast conclusion of in-
field phase

Taxpayer Raise
accepts [1] day assessment
Taxpayer
ready:
Full meeting [14] days
Pre- notes
investigation
Investigation Taxpayer Recon-
meeting
requested 14 days Investigations objects [7] days ciliation
site 7 days

Taxpayer not Enforcement

ready: Taxpayer not action/
Short grace forthcoming [7] days Admin
period assesment

Federal Inland Revenue Service

Reconciliation Process
Reconciliation timelines need to be strictly adhered to in order
to ensure swift resolution
Up to 3
times
TP attends
meeting

Reconciliation
7 days 7 days
meeting grace
scheduled

TP fails to attend TP not

meeting 7 forthcoming
days
Reconciliation
requested
Up to 2
TP supplies times Issue
documents assessment

Documents 7 days 7 days

requested grace

TP fails to supply TP not

documents 7 forthcoming
days

Federal Inland Revenue Service

The refined desk review process is composed of 4 stages

A B C D
Synthesize and
Tax returns and External data
Tax payer profiling focus area
account review review
identification

Activities ▪ Understand ▪ Review taxpayer’s ▪ Review external ▪ Identify 2-3 key

business line of tax- investigation sources of insight focus areas from
payer accounts and tax including: the 6 big possible
▪ Research on tax- computation for – NFIU database areas of focus
payer history and last 5 years – Customs
context ▪ Review WHT records
▪ Record relevant new credits – BPP contracts
developments on ▪ Identify key flags database
taxpayer from review – Internet
searches

Output ▪ Full taxpayer profile ▪ Preliminary flags ▪ Substantiated ▪ Full taxpayer desk
and context for further flags for focus review with 2-3
knowledge investigation areas priority areas

Timeline ▪ ½ day ▪ 1 day ▪ 2 days ▪ ½ day

Federal Inland Revenue Service

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B Available records of the taxpayer should be thoroughly to
identify potential risk flags
Category Key checks Category Key checks
▪ Is there any steep drop in ▪ What is the VAT/turnover ratio?
turnover? VAT ▪ Does the VAT/turnover ratio
▪ Does the turnover declared fit 4
Turn- returns seem low?
1 with company profile? ▪ Do they file VAT regularly?
over
▪ Does turnover declared correlate
with WHT credits? Is turnover ▪ How much does the taxpayer
declared as net of WHT? have in WHT credit notes?
5 WHT
▪ What is the COGS margin (%) ▪ Does the taxpayer declare WHT
as part turnover?
trend over the last 3-5 years?
2
Cost of ▪ How does the COGS margin ▪ Is capital allowance
sales compared with other peers? Capital
6 allowanc significantly high for the tax
▪ Does the COGS margin seem payer?
unnecessarily high? e

▪ What is the OPEX margin (%)

Opera- trend over the last 3-5 years?
3
ting ▪ How does OPEX margin compare
expense with other peers?
s ▪ Are there line items in OPEX that
seem very high?

7 Any other risk items which may be significant should be flagged

Federal Inland Revenue Service

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C External data should be leveraged where available to
substantiate identified risk flags (1/2)
Data source Details Key insight to leverage Availability
▪ All banking ▪ Can be used to give an ▪ …
transactions (debit & indication of the turnover
NFIU credit) above NGN and cash cost of the
database 10 million in the business in a given year
country ▪ Mainly to be used as an
indicator only

▪ All federal ▪ For businesses who are ▪ …

government- into government contracts
BPP awarded contracts (e.g., construction firms),
database and their value by this can be used to
year ascertain some portion of
turnover of the tax payer

Nigerian
▪ Records of customs ▪ For businesses, whose ▪ …
duties and declared core activity is
customs
value of imported importation, this can help
service
goods by company to estimate/give an
records
indication of their COGS

Federal Inland Revenue Service

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C External data should be leveraged where available to
substantiate identified risk flags (2/2)
Data source Details Key insight to leverage Availability

CBN FX
▪ Records of all FX ▪ For companies involved ▪ …
brought by in importation, this can
sales
companies and the give another indication of
records
use of the FX the COGS

Internet
▪ Various information ▪ Can be used as a pointer ▪ …
which may be for any of the 6 key risk
searches/
available on the areas
company
internet (e.g., recent
websites
projects awarded)

▪ Interviews with key ▪ For businesses with only ▪ …

Customer/ customers or 1 major customer/
supplier suppliers supplier, interviews or
interviews data requests can reveal
turnover/cost data

Federal Inland Revenue Service

1
D The desk review should result in a synthesis of the key focus
areas and data requests for the taxpayer (1/2)

Details
▪ Key areas to assess are turnover, cost of
Focus area sales, operating expenses, VAT, WHT, and
capital allowance

Key issues
▪ The key issues raised from steps A-C
across the 6 areas assessed Focus should
raised
be given to the
2-3 focus areas
Data to
▪ A list of clarifying data needed from the that have the
client based on the issues raised biggest
request from
client magnitude

▪ An initial estimate of the size of the focus

Estimated area with representing the least
magnitude magnitude and representing the highest
magnitude

Federal Inland Revenue Service

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