1. Distrain under the Personal Income Tax Act:
An Analysis and Evaluation of
Principles and Practice
Bidemi Daniel, Olumide
Delivered at the in-House Training of Legal Officers of the
Lagos State Internal Revenue Service on August 25, 2015

2. Our RoadMap:
• The Power of the Tax
Authority/Officer to Collect Taxes
• Introducing the Tax Collector
• The Power to Distrain: Evaluating
Section 104
• Practical Considerations in Distrain
• The Case Study
• Let’s Discuss

3. 1. The Power to Collect Taxes
• Intrinsic to the Tax Authority.
• Power can be exercised in any of the
following manners:
– The Tax Authority prosecuting the tax payer
in a Criminal Court;
– The Tax Authority suing the Tax Payer in a
Civil Court (including an action brought
under the Undefended List Procedure);
– The Tax Collector entering into any premises
during day time to collect information;
– The Tax Collector distraining the Assets of
the Tax Payer;
– The Tax Collector selling the distrained
Assets of the Tax Payer.

4. 2. The Tax Collector
• A Person authorised by the Tax
Authority to exercise the functions of
a Tax Collector under Part 12 of PITA
• The Functions recognised under Part
12 are that of the Tax Collector:
– entering into any premises during
day time to collect information;
– distraining the Assets of the Tax
Payer;
– selling the distrained Assets of the
Tax Payer.

5. 3. Section 104: The Conditions
1. Enforcement is against the taxable
person.
2. The taxable person must have been
served with an assessment.
3. The assessment must have become
final and conclusive.
4. The taxable person must have been
served with a demand notice
5. Payment must still be owing at the
expiration of the notice period.

6. 3. Section 104: The Conditions … cont’d
7. The tax collector may distrain and sell
any of the following assets of the
taxpayer: “goods”, “other chattels”,
“bond”, “other securities” (“Moveable
Assets”); “land”, premises” and “places”,
(“Immoveable Assets”); where ever they
may be found in Nigeria.
8. The tax authority must specifically
authorize its officer to proceed with the
distrain.
9. The officer must thereafter apply, under
oath, to a High Court Judge for the issue
of a formal Warrant of Distress.

7. 3. Section 104: The Conditions … cont’d
10. The Warrant authorizes the tax collector
to, if necessary, break into any building or
place in the daytime for the purpose of
the distrain.
11. Any police officer called upon must aid
and assist in the execution of the Warrant.
12. Sale of Moveable Assets can, on the
application of the owner, be delayed for
14 days to allow for payment of the tax, at
the expiration of which period the Assets
would be sold if the tax, including the
charges and cost of the distrain
(altogether, the “Debt”), have not been
paid.

8. 3. Section 104: The Conditions … cont’d
13. Sale of Immoveable Assets must be
authorized by a court of competent
jurisdiction.
14. The Debt shall be deducted from the
sale proceeds and any outstanding
amount is:
(a) remitted to the tax payer; or
(b) where cannot be found, paid
to the appropriate court;
all within 30days of the sale.

9. 4. Practical Considerations
• Do I intend to proceed against a tax payer
within the contemplation of PITA?
• Is the tax due for collection? In other
words:
– has an assessment been left unpaid for a
period in excess of 2months or the period
limited by the tax authority;
– has a demand notice been issued after the
expiration of the 2 months payment period
in which no payment was received; and has
1 month elapsed since the service of the
demand notice on the tax payer?

10. 4. Practical Considerations … cont’d
• Does the tax payer have Assets worth seizing?
In other words:
– Are there Assets that have been targeted?
– Do they belong to the tax payer?
– Where are the Assets?
– Are they Moveable or Immoveable Assets?
– Will the amount to be realized from the sale of the
Assets defray the Debt?
– Is the cost to be incurred in the keeping of the
Asset manageable?
– Can the Asset be easily sold?
• Have adequate security measures been put in
place, for example, sufficient police presence to
prevent any reprisals from the tax payer?

11. C A S E S T U D Y

12. L E T’S D I S C U S S