4. Nadine Rambaran is a finance consultant who operates as an independent contractor and has a wide client base. She is resident in Trinidad and Tobago. She filed her Income Tax Return for the 2015 year of income on the 30th April, 2021, in which she declared her chargeable income based on her income from her trade or business as a finance consultant of $300,000. In arriving at her chargeable income, she claimed as a deductible expense an amount of $50,000 being the aggregate cost of designer suits she bought which she wore when she attended meetings with high net worth clients. Her Income Tax Return for the 2015 year of income was subsequently selected for audit examination. The Board of Inland Revenue by Notice of Assessment dated 30th December, 2021 which was served on her on the 11th January, 2022, disallowed her claim for the costs of the designer suits and as a result her chargeable profits increased by $50,000 with additional tax thereon of $12,500. The basis of the Board of Inland Revenue for its adjustment was that the cost of such suits was not wholly and exclusively incurred in the production of income of the taxpayer as it had a dual purpose.

Nadine Rambaran has come to you for advice on the following:

a. Comment on the importance of the distinction between the times in which an assessment on a taxpayer is made from the time in which the notice of assessment is served on a taxpayer. (5 marks)

b. Was the assessment made by the Board of Inland Revenue statute barred? Clearly explain your reasoning. (2 marks)

c. Is there merit in the basis of the Board of Inland Revenue's assessment? Explain with reference to case law on duality of purpose. (9 marks)

d. What recourse is available to Nadine Rambaran to challenge the assessment; in addition, explain the procedure detailing the Court process as well and indicating the various time lines which have to be met? (9 marks)

Answer rating: 100% (QA)

a The distinction between the time of assessment and the time of service of the notice of assessment is important as it affects the taxpayers rights a... View the full answer