Why iTax will not take this month's return
Why iTax refuses a Kenyan business's current return when earlier ones are missing, how to find the gaps, and the order in which to clear a backlog.
By Achekam · · 4 min read · For Running a business businesses in Kenya
The return is ready, the figures agree with the books, the deadline is tomorrow, and iTax will not accept it. Nothing is wrong with this month. The obstacle is a return for an earlier period that was never filed, sometimes so long ago that nobody in the business remembers the obligation existed.
It is a frustrating way to miss a deadline you were ready for. The fix is mechanical, but it has to be done in the right order, and it helps to understand why iTax behaves this way.
Earlier periods come first
KRA's FAQ on filing returns on iTax is direct: iTax will not accept a current return until any missing returns for earlier periods have been filed.
Think of each tax obligation on your PIN as a chain of periods, one link per month or per year. iTax expects the chain to be unbroken. If one link is missing, every later link waits. A business with a gap in its VAT returns from two years ago cannot file this month's VAT return until the gap is filled, however urgent this month is.
Gaps usually come from ordinary events:
- An obligation was added to the PIN at registration, before the business started trading, and no one filed for the quiet months.
- A bookkeeper left and a month fell between the old routine and the new one.
- The business stopped an activity, such as employing staff, but the obligation stayed on the PIN and the returns stopped.
Nil returns for months with no trading
The second cause is the most frequent, and KRA's position on it is clear. KRA says a person with a PIN who has not traded must still file NIL returns for the periods without income. For income tax, KRA says every person with a KRA PIN that has an income tax obligation must file an annual return, and a nil return if they earned nothing in the year.
So a backlog is often made of nil returns: quick to file, but each one is a separate period that must be filed before the next. Filing nil returns in Kenya explains when they apply and how to file them.
Working out which returns are missing
Before you file anything, build the list. A simple method:
- Write down every obligation registered on the PIN, such as VAT, PAYE, income tax or rental income.
- For each one, list every period from the date the obligation started to today.
- Mark each period for which you hold an iTax acknowledgement receipt.
- Whatever is unmarked is the backlog.
Keep the list. You will use it to plan the filing, and it is the record you show your accountant or KRA if questions follow. If you are unsure which obligations sit on the PIN, ask KRA's contact centre before you start, rather than discovering a second chain halfway through the first.
Penalties on the late returns
Clearing the backlog files the returns late, and late returns can carry penalties. For VAT, KRA says late filing attracts a penalty of 5% of the tax due or Kshs 10,000, whichever is higher, and late payment attracts 5% of the tax due plus interest of 1% per month.
Read that rule carefully. Because the filing penalty is the higher of the two amounts, a late VAT return with little or no tax on it can still attract the fixed figure. A long run of missed nil returns can therefore add up, which is one more reason to fix gaps the month they appear. KRA's penalties pages set out the rules for other taxes at the time of writing; check them before you estimate what the backlog will cost.
Using Achekam's filing calendar to stop new gaps
Achekam does not file Kenyan returns. A person with the business's KRA filing permission files on iTax and uploads the acknowledgement into Achekam, and a different person verifies it before the return counts as filed. That two-step record is exactly the list you wish you had had when the backlog appeared: every period either has a verified acknowledgement or it does not.
Achekam's filing calendar shows the deadlines its approved rules produce, set to the end of the day in Africa/Nairobi. One behaviour to understand: the calendar leaves out any deadline whose rule is awaiting approval or contested, and says why. An empty week on the calendar is not proof that nothing is due, so read those notes and keep your own list of obligations alongside it. Kenya's tax calendar sets out the main dates.
The order in which to file a backlog
Once the list is built, work through it like this:
- Oldest first, obligation by obligation. iTax will insist on it anyway.
- Nil periods quickly. They need no workings, only care that each period is the right one.
- Periods with tax due next. Prepare each from the books, file it, generate the payment slip and pay against its payment reference.
- Keep every acknowledgement as you go, and record it against the period.
- File the current return last, once iTax accepts it.
- Deal with obligations that no longer apply. If the business no longer employs staff or no longer trades in a taxed activity, ask KRA or your adviser about removing the obligation rather than filing nil returns for it indefinitely.
If the backlog includes returns with real figures, the Excel return forms help; see filing iTax returns with the Excel forms.
KRA's FAQ on filing returns on iTax answers the practical questions that come up while clearing a backlog, from the downloadable return forms to credit notes and amended returns.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
