Company loses appeal to block URA from accessing its financial records

Kampala, Uganda | THE INDEPENDENT | The High Court in Kampala has dismissed an appeal in which YO! Uganda Limited, a Financial Technology company was seeking a temporary injunction restraining Uganda Revenue Authority from accessing,  reviewing or disclosing information contained in the electronic and manual records seized from the company premises a few months year ago.

Yo! Uganda Limited is a technology solutions company licensed and regulated by the Central Bank of Uganda as a Payment System Operator (Large Funds Transfer Class) under the National Payment System Act.

On March 14, 2023, URA wrote to the company requesting information relating to its sales records, purchases, cash records, cash books, bank statements and bank deposit slips, salary payrolls and payment vouchers, audited financial statements, management accounts and details of transactions with all other companies.

Court heard that URA also visited the company premises and although they were given the information, they were not contented and demanded electronic devices including the personal mobile phone of one David Ssonko. They also demanded access to the server room and threatened to close the company if the said information was not availed.

URA subsequently took and copied two company laptops and two hard disc drivers belonging to Begumisa and Ssonko. But the company directors filed a case in the High Court saying that the information that was seized on the laptop and disk drivers was very sensitive and not tax-related.

They also sought a temporary injunction seeking to block URA from opening, accessing, and reviewing the records that they had seized. The Company accused URA of having violated their constitutional right to liberty and  Personal Data rights.

In response, URA argued that the review was based on intel from the Financial  Intelligence Authority and it was intended to establish possible tax evasion and money laundering involving FINTECH companies which had consistently declared losses despite quick adaptation of their services.

According to URA, the taxman did not obtain general/private information relating to the customer balances but rather information relating to their financial transactions. The tax body added that the company team never showed up when they were invited for an entry meeting on March 31, 2023.

On June 5,  2023, the Registrar of the High Court refused to grant the orders sought on account that there was no irreparable loss to be suffered by the company if the revenue authority reviewed the data.

But the company together with David Ssonko and its Managing Director Gerald  Begumisa petitioned the judge saying the Registrar of the High Court erred in finding that they were not going to suffer any irreparable loss from disclosure of their personal information and or breach of their privacy.

They also added that the Registrar erred by failing to grant a mandatory injunction compelling  URA and her agents, servants or employees or anyone acting on her behalf to return to them the electronic and manual records containing personal and non-tax related information which had been seized from the company.

However, this appeal has also been dismissed in a decision delivered today by Civil Division Judge Musa Ssekaana who faulted the company for using the to breach the law.

In his ruling, Justice Ssekaana said that stopping URA from interrogating or investigating the possible tax evasion against the company would mean that the appellants shall never be able to face the law or pay the tax due if found liable for tax evasion.

“The effect of the orders sought is to stop URA from enforcing the law simply because the appellants allege a possible violation of their constitutional right to privacy or personal data rights which in my view is remote and is yet to be proved before the court,” Ssekaana said.

He added that the appellant’s case is premised on speculation and conjecture which the court would not at this stage give too much weight in the absence of any specific violation committed at this stage or better evidence of alleged violation presented to his court.

According to Ssekaana, the appellants cannot use the court to assist them in breach of the law as this would become an open floodgate for all potential tax evaders to use this as a precedent to avoid investigation by claiming possible violation of constitutional rights.

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URN