Case Study: How We Helped A Client Slash Their Tax Audit Liability

Overview 

Client A is an international not-for-profit entity that works to foster broad-based economic growth, raise living standards, and create vibrant communities.  

The Challenge 

Ghana Revenue Authority (GRA) performed a tax audit covering three years. GRA issued its report and an assessment of a little over GHC 4.0 million back taxes. The assessment posed challenges for A: 

  • They did not expect a significant assessment because they took care to comply with the tax law. 
  • The project was at the closing phase and did not have enough spare cash to settle a significant assessment. Not-for-profit funding is specific and does not make provisions for back taxes.  
  • It had limited time to respond before the assessment crystalized. It had to analyze a large volume of transactions held in its accounting system to respond effectively, but it did not have the expertise and tools to do that. 
  • It also did not have the deep in-house expertise to respond effectively. 

The Solution 

Client A engaged us to help resolve the issues arising from the tax audit. To respond effectively to issues raised in tax audits, you need tax expertise and the ability to analyze transactions at a granular level and review underlying documentation. We assembled a team comprising tax and data analytics experts that had experience responding to tax audits.  

Our aim was to help the entity pay the right amount of tax based on its business circumstances and the law. We carried out several procedures: 

  • Understanding A’s policies on benefits, business travel and vendor payments. 
  • Recomputed employee payroll taxes to determine whether they withheld and remitted the appropriate PAYE taxes to GRA. 
  • Detailed examination of business travel per diem to determine whether A had treated them correctly for tax, and tax charged where required.  
  • Reviewed vendor and consultant records for years under consideration. We reviewed payments to the vendors and consultants to determine A withheld the right taxes (WHT), remitted, and documented with tax certificates, as applicable. 
  • Reviewed the determination of end-of-service severance payments.   
  • Represented the client in negotiations with the Ghana Revenue Authorities. 
  • Negotiated tax abatement on fees, penalties, and interest. 

The Result 
At the end of the exercise, we agreed on a final tax liability of just under GHC 1 million.  

We were successful because: 

  • We maintained ongoing engagement with GRA auditors throughout the assignment. 
  • The client staff was cooperative and responsive. 
  • Use of data analytical tools - applying data analysis to the large volume of data enabled us to examine underlying records and generate documents and evidence to back our position. 
  • Application of tax expertise and experience in handling tax audits.  


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