Alex Trachtenberg v Commissioner Domestic Taxes
In May 2025 the Tax Appeals Tribunal handed down a significant ruling in a case arising from KRA’s attempt to collect legacy tax balances from a company that had been legally dissolved seven years earlier.
The Tribunal’s decision sets an important precedent on what tax authorities can and cannot do once a company ceases to exist, and what that means for the directors who remain personally exposed.
Background
- Econ Investments Limited was formally dissolved following a voluntary application by its director and shareholder.
- The dissolution followed the proper statutory process and a public notice was issued inviting any creditor or interested party to raise objections, and none did, including KRA.
- Post-dissolution, the director applied to KRA to cancel the company’s PIN and deregister its tax obligations.
- KRA rejected the application and requested additional financial statements where the director complied but KRA never responded.
- Five years later KRA sent an email to the dissolved company’s address notifying it of a migration of legacy debit balances from its old system to the current iTax platform.
- KRA then issued an Objection Decision which the former director and shareholder, appealed to the Tax Appeals Tribunal.
Can a Former Director Appeal on Behalf of a Dissolved Company?
- KRA argued that a director had no legal standing to file the appeal since the Objection Decision was addressed to the company, not to him personally.
- The Tribunal rejected this argument.
- It noted that a dissolved company cannot sue or be sued since it no longer exists in the eyes of the law.
- The Tribunal insisted that the dead company defending itself while simultaneously barring the director from doing so would create an absurd and unjust result.
PIN Cancelled by Operation of Law
- A central finding in the case was that Econ Investments’ KRA PIN had already been deregistered long before KRA issued its migration notice, by operation of law.
- The Tax Procedures Act is clear in the regard of where the Commissioner fails to respond to a deregistration application within six months, the applicant is deemed deregistered and the PIN is cancelled on the effective date.
- The director applied for PIN cancellation and provided the required financial statements and KRA never responded.
- Six months from the date of full compliance lapsed and at which point the dissolved company’s PIN was cancelled by operation of law. The Tribunal so held.
- KRA’s subsequent attempt to migrate legacy balances in 2024 and issue an Objection Decision was therefore directed at an entity that had not only been dissolved under company law but had also ceased to be a registered taxpayer for over five years.
You Cannot Collect Taxes From a Non-Existent Taxpayer
- KRA’s position was that the migration of legacy balances was not a new tax assessment but simply a transfer of existing self-assessed debts from an old system to iTax. On that basis, it argued the balances remained valid and collectible regardless of the company’s dissolution.
- The Tribunal was unpersuaded the tribunal held that attempting to collect tax from a dissolved and deregistered entity without first restoring it to the Companies Register is legally impermissible.
- The Tribunal cited the Court of Appeal’s long-standing position that a dissolved company cannot sue or be sued, and that any party seeking to pursue claims against it must first apply to court for restoration.
Outcome of the Appeal
The Tribunal allowed the appeal in full vacating both KRA’s migration notice and the Objection Decision.
The Tribunal further confirmed that Econ Investments Limited was deemed deregistered for tax purposes by operation of law.
Conclusion
- Directors of dissolved companies are not insulated from tax claims.
- A dissolved company cannot be pursued for tax until it is restored to the Companies Register by court order and KRA communications, assessments or objection decisions directed at a dissolved entity before that restoration are legally void.
- Where KRA fails to respond to a deregistration application within six months, the PIN is cancelled by operation of law.
- Legacy balance migrations are not a workaround for expired limitation periods.
- Documentation from decades past cannot reasonably be demanded
Recommendations
- The Tribunal’s decision is a clear signal that it will hold KRA to the procedural requirements of both tax law and company law.
- The migration of legacy balances to iTax is not a neutral administrative exercise and it must comply with the full weight of the statutory framework.
- For taxpayers managing dissolution: document everything, apply for PIN cancellation promptly, and follow up if KRA does not respond within six months. The law is on your side if the process was correctly followed.
- The case reinforces the importance of tracking deregistration applications through to completion and not assuming silence from KRA signals approval.
- The case also highlights that where a dissolved entity faces tax claims, a director with ongoing personal exposure has both the standing and a clear legal basis to challenge those claims.
At Intelpoint Consulting, we help businesses navigate complex tax disputes, company dissolution processes and KRA compliance obligations.
Whether you are managing legacy tax exposure, dealing with a deregistration that was never closed out or facing an objection decision that does not hold up legally, our team brings the technical depth and practical experience to protect your position.