Introduction

For many small and medium-sized enterprises (SMEs) in Nigeria, tax compliance remains one of the most challenging aspects of running a business. Unfortunately, simple tax mistakes can result in heavy penalties, cash flow disruptions, and unnecessary disputes with tax authorities.

At Claystone Consulting Limited, we work with SMEs across multiple sectors, and we’ve identified recurring tax issues that continue to affect business growth. This article highlights the most common tax mistakes Nigerian SMEs make—and how to avoid them.

1. Late or Non-Filing of Tax Returns

Many businesses fail to meet statutory deadlines for filing:

• Company Income Tax (CIT)
• Value Added Tax (VAT)
• PAYE and Withholding Tax

Why this is risky:
Late filing attracts penalties, interest, and possible audits.

Solution:
Work with a professional tax advisor to ensure timely and accurate submissions.

2. Poor Tax Planning

Most SMEs focus only on paying taxes, not planning for them.

Common issues include:

• Overpaying taxes
• Missing available tax reliefs and incentives
• Poor cash flow forecasting

Solution:
Strategic tax planning can legally reduce tax liabilities and improve profitability.

3. Incorrect VAT Treatment

VAT errors are among the most frequent causes of disputes with FIRS.

Typical VAT mistakes:

• Charging VAT incorrectly
• Claiming ineligible VAT inputs
• Poor VAT documentation

Solution:
Proper VAT structuring and periodic reviews prevent costly errors.

4. Mixing Personal and Business Finances

Many SMEs operate without clear separation between owners’ finances and company accounts.

Why it’s a problem:

• Complicates tax reporting
• Raises red flags during audits
• Weakens financial credibility

Solution:
Maintain separate bank accounts and proper accounting records.

5. Ignoring Tax Audits and Queries

Some businesses delay or ignore tax authority correspondence.

Impact:

• Escalated penalties
• Enforcement actions
• Reputational risk

Solution:
Professional representation ensures proper audit defense and dispute resolution.

How Claystone Consulting Helps

At Claystone Consulting, we provide:

• End-to-end tax compliance
• Proactive tax planning
• Audit defense and dispute resolution
• Continuous regulatory updates

Our clients achieve an average of 18% tax savings through structured advisory.

Need help fixing your tax compliance or reducing your tax exposure?
👉 Book a consultation with Claystone Consulting today.