We have all heard stories about a business transaction gone wrong, a seller who did not provide goods as expected, two parties interpreting contract terms differently, or a client who has unreasonable expectations from your services. These are not just obstacles faces while running their business. These disagreements can sometimes escalate into something more serious and you could risk losing everything you have worked so hard to accomplish.

While some people hate litigation and try to avoid it as much as possible, others see it as a tool to obtain leverage. The spectrum for threatening a lawsuit can range from honestly believing one has been wronged, to intimidation tactics.  A story is told of John, a tycoon, who had many properties but never considered giving to Caesar what belonged to Caesar. He struggled with long hours of court hearings and legal jargon which he barely understood. He was stressed as the case took much longer than he expected. It was clear that he was losing the battle and eventually, the court ruled in favour of the Authority. He was left with a lot to pay; the cost of the suit, lawyers’ fees and the amount evaded plus interest. He became bankrupt and looked like a foreigner in his own country.

What should a person do if he/she is in John’s Shoes?

Alternative Dispute Resolution (ADR) is the way to go. This is an out of court method used to resolve disputes. It’s easy and fast. The statutes provide timelines to which both parties must adhere. It is also less costly compared to court procedures. If John had opted for this, it would have saved him court drama. The ADR procedure is very friendly to the taxpayer and improves the relationship between taxpayer and KRA It addresses customer concerns and improves tax compliance.

Furthermore, the procedure for lodging ADR is simple. Applications are made online via the KRA website and addressed to Tax Dispute Resolution Division, the relevant Commissioner is copied with the relevant documents attached. The taxpayer will receive an acknowledgment receipt via e-mail and the dispute will then be allocated to a case manager. The relevant parties will be invited to the preliminary ADR meeting through written letters, e-mail and telephone correspondence.

No matter the reason, litigation is costly, time-consuming, and has the potential to destroy what was previously a good relationship. As you develop your contracts and if you do end up with a dispute in your hands, it is worth looking into ADR to resolve disputes quickly and mitigate losses. Learn more about ADR here.

By Phanice Munandi