Kehinde Kassim & Co.
Withholding tax misallocation is one of those quiet problems that sits on the balance sheet for years before anyone notices. The amounts can be substantial — and recovery is uncommon enough that many finance teams assume it is impossible. It is not. But the route is procedural, document-heavy, and time-sensitive.
The typical pattern is straightforward. A taxpayer subject to State tax has withholding tax remitted to the Federal Inland Revenue Service in error — often because of a misclassification at the payer's end. The taxpayer receives a Federal credit note for tax that should have been credited to a State revenue authority. Over time, the State asserts a liability the taxpayer believes it has already paid.
Begin with reconciliation. Build a transaction-by-transaction ledger of every withholding tax payment, the credit note received, and the authority to which it should have been directed. This is the foundational evidence; without it, both authorities will (correctly) decline to act.
Engage both authorities in parallel. The Federal authority must release the misallocated amount; the State authority must accept the redirection. Sequential engagement multiplies cycle time.
Document everything contemporaneously — the call logs, the correspondence, the meeting minutes. A successful redirection often hinges on what can be evidenced six or twelve months later.
The fact that such revisions are uncommon is exactly why a disciplined, well-evidenced approach matters.
We recently completed an engagement for Investment One Financial Services that successfully redirected a withholding tax misallocation from Federal to Lagos State. The client's CFO acknowledged that such revisions are uncommon — which is precisely why the result depended on diligence, not on luck.
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