No. The Nigeria Revenue Service does not need a court order to take money from your company's bank account. Under Section 60 of the Nigeria Tax Administration Act 2025, once a tax liability is established and unpaid, NRS and state revenue services can order your bank to pay them directly. Many Nigerian business owners still assume a court process has to come first. That assumption is now a costly mistake.
What is the "power of substitution" under Nigeria's tax laws?
The power of substitution lets a tax authority bypass a taxpayer who has not settled an established liability and collect the money directly from a third party holding that taxpayer's funds. Under Section 60 of the Nigeria Tax Administration Act 2025, that third party can be a bank, an employer, a tenant, a customer, a debtor, a business agent, or, in the Act's own words, "any person owing money to the taxpayer, whether presently due or accruing." This is not a hypothetical power sitting unused in the statute book. In January 2026, the Lagos State Internal Revenue Service (LIRS) publicly confirmed it had invoked Section 60 to recover outstanding tax liabilities directly from third parties holding defaulting taxpayers' funds.
Does NRS need a court order before it can touch your account?
No. The process is administrative, not judicial. The tax authority issues a formal substitution notice to the third party, most often the taxpayer's bank, specifying the exact amount owed. Once that notice is served, the recipient is required to remit the stated amount without delay. Refusing to comply is itself an offence under the Act, which is one reason banks generally act on a valid notice rather than contest it.
Crucially, that notice is served on the party holding your money, not necessarily on you first. That is exactly why so many business owners are caught off guard: they are waiting for a summons or a hearing that the law was never designed to give them at this stage.
What actually triggers a substitution notice, and what doesn't?
- Myth: "NRS or my state revenue service needs a court order to touch my company's account." Fact: Section 60 lets the authority go straight to your bank with a substitution notice; no court order is required at this stage.
- Myth: "This only happens to large companies after a full tax audit." Fact: it applies to any established, unpaid liability, including unremitted VAT, PAYE or withholding tax that was filed but never paid, whatever the size of the business.
- Myth: "If I ignore an assessment notice, nothing happens until they take me to court." Fact: an assessment you never object to can become an established liability, at which point substitution becomes available with no court step in between.
Substitution is not meant for figures still under genuine dispute. If you believe an assessment is wrong, the Joint Revenue Board Act 2025 created an Office of the Tax Ombudsman to hear tax disputes, but that route only helps if you use it before the liability becomes final.
What this means for your business
- Treat every assessment or demand notice as urgent. A notice left unanswered can quietly harden into an enforceable liability. If you're already behind on filings, our step-by-step NRS tax audit checklist is a good starting point for getting your position in order before an audit finding hardens into a debt.
- Don't assume small size buys you time. Substitution reaches unpaid VAT, PAYE and withholding tax regardless of turnover, and, as we've covered before, smaller companies are still required to file returns even where little or no tax is due.
- Remember who else can be reached. The Act's third-party list extends to employers, tenants, customers and business agents, so a substitution notice could also intercept money owed to you by a client or lessee, not just your bank balance.
- Reconcile before it's forced on you. Most substitution cases trace back to a self-assessed or filed liability that was simply never paid, not a surprise finding, so a regular reconciliation of what's filed against what's actually remitted closes off the most common route into this problem.
How should Nigerian businesses respond right now?
- Audit your own notice history. Check for any NRS, LIRS or state revenue service notice sitting unanswered, and get a professional view on whether it has hardened into an established liability.
- Set a fixed response window for tax notices. Route every notice to your finance or tax lead immediately rather than letting it sit in an inbox or a physical file.
- Get representation before a liability crystallises. Objecting correctly and on time, or escalating a genuine dispute to the Tax Ombudsman, is far cheaper than contesting a substitution notice after your bank has already remitted the funds.
FAQ
Does NRS need a court order to take money from my company's bank account in Nigeria? No. Under Section 60 of the Nigeria Tax Administration Act 2025, once a liability is established and unpaid, the tax authority can send a formal substitution notice to your bank ordering it to remit the money directly, without a court order.
What triggers a power-of-substitution action? An established, unpaid tax liability the taxpayer has failed, neglected or refused to settle, often an unremitted VAT, PAYE or withholding tax filing, or an assessment that was never formally objected to. It is not used against figures still under genuine dispute.
Can my bank refuse to comply with a substitution notice? Not without legal risk. The Act treats a third party's failure to comply with a valid substitution notice as an offence, so banks and other recipients generally remit the stated amount once notice is properly served.
If your business has an NRS, LIRS or state revenue service notice sitting unresolved, don't wait to find out whether it has become an established liability. VOG Global Consult can review your assessment history, respond to notices on your behalf, and represent you before the tax authority to keep a disputed figure from turning into an enforceable debt. To book a review, contact VOG Global at Suite 060 to 061, Orago Complex, Area 10, Garki, Abuja.