September 28, (THEWILL) – Ask almost any business owner or finance professional in Nigeria how long they need to keep their financial records, and you will get the exact same quick answer: “Six years.”
There is a general comfortable assumption in the business community that once a financial year turns six years old, the taxman loses his powers. People assume that once that 6-year window closes, you can safely shred old receipts, delete old transaction ledgers, and pop champagne because your enterprise is officially off the hook.
If you are running your business on that assumption, you are standing on very thin ice.
Under Section 36 of the Nigeria Tax Administration Act (NTAA), the rules surrounding tax audits and additional assessments have been laid bare. The truth is simple: the tax authority can revisit your old books far beyond the six-year mark, and if you cannot prove your numbers because you threw your records away, you will pay dearly for it.
The 6-Year Window Has a Catch
Section 36(1) of the NTAA sets out the baseline rule that many people know: the tax authority has six years to review your tax position and raise an additional assessment if they feel you were under-assessed or didn’t pay enough tax.
However, many business owners miss what comes right after in Section 36(2).
The law clearly states that the six-year deadline does not stop a tax authority from continuing an audit or raising extra tax bills, as long as they started that tax audit before the six years expired.
In real life, this is how businesses get caught in a dangerous administrative trap. A tax office sends you an audit notification letter in Year 5. Due to slow back-and-forth letters, delayed meetings, or administrative backlogs, the audit drags on for years. You cannot wave the 6-year rule to make them go away. As long as that initial letter was dropped in your office before the 6-year clock ran out, that tax year remains wide open indefinitely.
The “Ghost of Taxes Past”: When the Clock Stops Completely If the open-audit rule sounds tricky, Section 36(4) is the real game-changer.
The law states that whenever there is a “deliberate misstatement” on your tax filings, the tax authority can come after your business at any time, and as often as necessary, to recover the missing money.
Read that phrase again: at any time!
This single provision erases the 6-year limitation completely. Having witnessed and managed complex tax investigations that dragged corporate clients back through records spanning over two decades—revisiting closed periods from 1999 all the way to 2020—the reality on the ground is stark. When tax investigators suspect unrecorded revenue, fake expense claims, or hidden transactions, they use this statutory power to reopen books you thought were long dead and buried.
This is where the real danger lies for the average business owner.
When tax officers reopen an investigation from ten or fifteen years ago, the legal burden of proof rests squarely on your shoulders. If you shredded your receipts, lost your bank statements, or deleted your old accounting files because “six years had passed,” you cannot defend yourself. And in tax enforcement, when you cannot prove your numbers, the tax authority uses its “best judgment” to estimate what you owe. Those estimates are rarely in your favor.
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New Facts Reopen Old Books
To make matters even tighter, Section 36(5) warns that if the tax authority uncovers fresh facts about your business, they can use those new facts to recalculate your tax bill for that year, even if they already audited you for that same period before.
Imagine a scenario where your company completed a routine tax audit in 2021 for the 2018 financial year, paid a minor settlement, and received a closing letter. If the tax authority later receives third-party bank reporting records or intelligence from a vendor showing undisclosed transactions from 2018, Section 36(5) allows them to reopen that 2018 file.
You cannot claim “double jeopardy” or argue that an old year was already closed if new evidence shows your declarations were incomplete. In an era where automated banking disclosures and digital tracking are becoming the norm, new facts are popping up every single day.
The Disconnect Between Company Law and Tax Reality
A major reason business owners fall into this trap is the conflict between general corporate rules and tax legislation. Under standard corporate guidelines, retaining financial documents for six years is often considered standard practice.
Because of this, internal company policies are routinely set up to purge physical paper archives once the six-year clock expires. But while corporate laws may allow you to discard old papers, Section 36 of the NTAA creates an ongoing legal exposure that ignores that six-year safety net.
When a tax audit stretches far beyond the statutory limit or a historical misstatement is alleged, saying “our company policy said we should destroy records after six years” will not stop the revenue service from issuing a heavy additional assessment.
How to Protect Your Business
Relying on paper receipts and a 6-year trash policy is an outdated, high-risk way to run a business in modern Nigeria. To protect your enterprise from sudden historical tax liabilities, you need a smarter strategy:
Go Digital and Go Permanent: Physical papers fade and take up office space, but digital files cost almost nothing to keep. Scan every invoice, keep cloud backups of all bank statements, and store your tax returns indefinitely.
Never Leave an Audit Hanging: If a tax authority starts an audit, do not let it stall out of sight. Push actively for a formal written Audit Clearance Certificate or an official letter confirming the review is concluded. Verbal promises do not hold up in law.
Keep Paper Trails for Big Decisions: Whenever you make a major financial move—like restructuring debt, selling a large asset, or declaring shareholder dividends—keep a clear file explaining the transaction and the professional tax advice you followed.
The Bottom Line
Time does not cure bad tax records. The 6-year limit is a conditional rule, not a permanent shield, and it vanishes the moment deliberate errors or ongoing audits enter the picture.
In today’s tax climate, the best defense is having accessible digital records that can tell your story accurately, no matter how many years later the taxman comes knocking.
Caveat: The views expressed in this article are strictly those of the author and do not necessarily reflect the official position of his employer
By Tomi Akinwale
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Akinwale is a chartered accountant, tax consultant, and professional advisor.
