Senior Accounting Officer ("SAO") Guidance

Certain large UK companies must appoint an individual to be their SAO, to ensure the company establishes and maintains appropriate tax accounting arrangements to allow tax liabilities to be calculated accurately in all material respects.

SAO's can incur personal fines if they fail to comply with their obligations.

The SAO must give HMRC a certificate each financial year stating whether the company had appropriate tax accounting arrangements. If the company did not have appropriate tax accounting arrangements, they must also explain what the shortcomings were. The certificate must comply with certain prescribed specifications and must be unambiguous.

Which companies must appoint an SAO?

A company must appoint an SAO if it is a company incorporated in the UK for the financial year; and it has a turnover of more than £200 million and/or a relevant balance sheet total of more than £2 billion, either alone or when its results are aggregated with other UK companies in the same group, for the preceding financial year.

Dormant companies in a group, as well as active ones, must comply with the obligations.

Who should the SAO be?

The SAO is the director or officer of a company who, in the company's reasonable opinion, has overall responsibility for the company's financial accounting arrangements.

Each qualifying company must identify who its SAO is. Where a group of companies is involved, there may be a different person who acts as SAO for each company, a single person who acts as SAO for all the group companies or several different persons who act as SAOs for different parts of the group.

The role of the SAO cannot be filled by an agent.

Each financial year, a qualifying company must notify the name of its SAO to HMRC and must do so separately from the SAO Certificate. Only one person can be SAO at any one time, but the company may have more than one SAO over the course of a financial year. As the company must notify the details of all persons who have been its SAO over the course of a financial year and can supply only one notification for a financial year, it cannot make a notification to HMRC until the financial year has ended.

Public limited companies must notify HMRC within six months after the end of the accounting period. Other companies must notify within nine months after the end of the accounting period.

What must the SAO do?

An SAO's main duty is to take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements. As part of this duty, an SAO must monitor the arrangements and identify any respects in which the arrangements fall short of the requirement.

Tax accounting arrangements are the framework of responsibilities, policies, appropriate people and procedures in place for managing the tax compliance risk, and the systems and processes which put this framework into practice. The tax accounting arrangements must allow for the tax liabilities of the company to be calculated accurately in all material respects.

Reasonable steps are the steps a person in this situation would normally be expected to take to ensure awareness of all taxes and duties for which the company is liable; ensure that risks to tax compliance are properly managed and enable the various returns to be prepared with an appropriate degree of confidence.

The steps that are reasonable will depend on the particular circumstances. Reasonable steps might include establishing and maintaining processes to ensure compliance with legal requirements and periodically checking and testing systems, controls, process flows and transactions.

An SAO would probably be expected to ensure that the introduction of new systems and processes, or changes to them, are supported by appropriate planning, risk assessment, implementation and evaluation activities.

Reasonable steps for an SAO to take would include ensuring the maintenance and retention of required records. An SAO would also be expected to ensure staff and any third party to whom responsibilities are delegated are appropriately trained, have the necessary guidance, qualifications, knowledge and experience needed to carry out their functions.

The SAO must perform the main duty throughout the period of their responsibility. It is not something that they can merely give attention to at the end of a year.

The SAO obligations apply in respect of corporation tax, VAT, PAYE, insurance premium tax SDLT, SDRT, petroleum revenue tax, customs duties, excise duties, including air passenger duty and bank levy. Note that they do not apply in relation to national insurance contributions.


A penalty may be charged on a qualifying company if it fails to notify the name of its SAO within certain timescales.

A penalty may be chargeable on an SAO personally if they fail to meet their main duty, fail to give HMRC a certificate within the required timescale, or they provide a timely certificate that contains a careless or deliberate inaccuracy.

Each of these penalties is a fixed amount of £5,000.

A person is not liable to a penalty for a failure to notify details of an SAO, a failure to carry out the main duty, or a failure to provide a certificate on time, if they satisfy HMRC that they have a reasonable excuse for the failure, and they put right the failure without unreasonable delay after the excuse has ended.

A reasonable excuse is normally an unexpected or unusual event that is either unforeseeable or beyond the person's control, and which prevents the person from complying with an obligation under the SAO provisions. Reasonable excuse does not apply to a careless or deliberate inaccuracy in an SAO certificate.

HMRC guidance also says that HMRC will "not normally seek to assess penalties where a group of companies, or an SAO, omitted details of dormant companies where a risk assessment indicates minimal requirement for tax accounting arrangements". However, HMRC will only consider a company to be dormant for these purposes if it has no profits or income and no assets capable of producing profits, income or gains.

Tax Strategy

It is a requirement for certain businesses to publish online their tax strategy as it relates to UK taxation. For most organisations, this is typically a set of tax principles or short statements.

The requirement only applies to large businesses, including partnerships and LLPs.

A large business is one with either, or both, a turnover above £200 million and a balance sheet total over £2 billion. This includes all businesses handled by HMRC's large business directorate as well as the larger groups in its mid-sized business directorate.

Having a standalone Tax Strategy is not enough. You need to demonstrate that the strategy is integral to the way your business operates and embedded in your daily operations.

This is done by developing an internal Tax Policy, which underpins the principles in your Tax Strategy and typically includes most elements of the Tax Control Framework.

The development of a Tax Policy provides those with tax responsibilities with the mandate to clearly define and/or make changes in how tax is managed.

The content of the Tax Policy is often 'forward-looking' in the sense that once approved, the tax and finance function has the remit to make changes in the way that tax operates in the business.

Development of a tax strategy

We define a Tax Strategy as providing the vision for your current and future operations. You may wish or already be required to publish this externally in accordance with Finance Act 2016. Typically, this would be 2-3 pages setting out important tax principles, including your tax risk appetite, tax governance, approach to tax planning, and relationship with HM Revenue & Customs ("HMRC").

Tax Investigation Insurance

Tailored Fee Protection Service

In the UK we live in an environment whereby the taxpayer is responsible for assessing their own tax and accordingly HMRC opens enquiries to check if the taxpayer has paid the right amount of tax.

The number of enquiries and businesses under scrutiny is ever increasing, especially with HMRC using a variety of sources to source data.

In the event of an enquiry, HMRC may seek to attend your premises and may wish to review all your underlying books and records. They will often try to raise an assessment for additional tax and this may trigger additional interest and penalties which can, in certain circumstances, be more than the tax at stake. Therefore, it is imperative that you contact us at the earliest opportunity so that we can manage the entire process whilst, once approved, you have peace of mind that our fees are covered.

Therefore, it is with great excitement that we are delighted to introduce a new opportunity that we have been able to negotiate with our tax insurers, Qdos Vantage.

Due to the high levels of turnover noted in the Auto Retail sector, premiums are often higher than what we would like to be able to offer. However, due to our sector expertise and knowledge, we have now been able to negotiate a bespoke automotive fee protection policy with our insurers going forward.

Subject to certain underwriting requirements, including HMRC enquiry history*, we are able to offer a more beneficial fee structure.

If you are interested in putting cover in place, please contact one of our team at the back of the leaflet or your usual UHY contact.

*HMRC Compliance Check History

Please advise if your business or any related businesses have experienced a HMRC enquiry check during the last 6 years and if so, provide full details or a copy of the enquiry closure notice(s). We need to separately notify the tax insurers of any such enquiry or investigation in advance.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.