All companies must deliver correct and complete tax returns.
A company may not be able to do this if its tax accounting arrangements are not fit for purpose. These arrangements will range from how it accounts for its business transactions to how it works out its final tax liability.
Schedule 46 FA09 sets out rules for certain large companies. Those companies must establish and maintain their tax accounting arrangements and their Senior Accounting Officer (SAO) is responsible for ensuring that they do.
This guidance tells the reader about
- the rules that put responsibilities on those companies and particularly their SAOs
- the actions that those companies and SAOs must take
- how HMRC will ensure that they comply with the rules, and
- the penalties chargeable if they fail to comply.
The way in which HMRC ensures compliance with the SAO rules is consistent with HMRC’s wider strategy for Mid-sized and Large Businesses by which we seek to build and maintain open and transparent relationships with companies and to work collaboratively with them in real time to reduce their level of tax compliance risk.
Currently SAO rules only apply to large companies (turnover of £200m plus) but will HMRC extent this to smaller companies?
Senior Accounting Officer Main duty: what is the main duty
The main duty of a Senior Accounting Officer (SAO) is to take reasonable steps to ensure that a qualifying company, see SAOG11000, establishes and maintains appropriate tax accounting arrangements.
This means, in particular, that the SAO must take reasonable steps to
- monitor the accounting arrangements of the company and
- identify any respects in which those arrangements are not appropriate tax accounting arrangements.
Penalties
A penalty of £5,000 is charged for the following failures:
- Failure by the company to notify HMRC of the name and contact details of its SAO
- Failure by the SAO to carry out their main duty under the rules
- Failure by the SAO to provide a certificate to HMRC, or providing a certificate that contains a careless or deliberate inaccuracy.
The penalty is payable by the person responsible for the failure, as above. The penalties are at a flat rate and cannot be mitigated.
K Thathiah v HMRC [2017] UKFTT 601 (3 August 2017)
The FTT found that a senior accounting officer (SAO) had not breached his main duty under FA 2009 Sch 46.
The case related to VAT errors totaling £1.3m despite providing ‘clean’ certificates, however, it was decided that reasonable steps were being taken to ensure the accuracy of VAT returns for example setting up a team, providing training and using an agent.
I think all SAO’s should take this a warning! get the right systems and procedures or face personal penalties
Hiya Steve
I hope you are well.
I just wanted to find out where your office is. I need to pop in for a chat when its convenient. Sorry I have not been able to catch up with you at PPN but hope to be at the next one.
Hope to hear back soon Christina
(Wheeler)( proper-t-rescue)