The Senior Accounting Officer (SAO) regime forms a key part of any large business’s tax governance and tax risk management framework. SAO is not just a compliance requirement. It can be used as a valuable tool to drive improvements in key tax processes and systems.

The SAO regime covers a range of taxes and duties and aims to ensure that qualifying companies have adequate systems in place so that the correct tax liabilities are reported to HMRC.

Qualifying companies must appoint a director or officer who takes overall responsibility for the company’s financial accounting arrangements. The main role of the SAO is to take reasonable steps to establish and maintain appropriate tax accounting arrangements. Penalties for failure to comply can be levied on the SAO personally, as well as on the company. Arrangements are considered appropriate if they enable the company’s relevant UK tax liabilities to be calculated accurately in all material respects. Qualifying companies must notify HMRC of their nominated SAO each year.

The SAO is required to prepare and submit an annual certificate indicating whether or not the entity has established and maintained appropriate tax accounting arrangements during the financial year.

Given the personal liability that can apply to SAOs, it is important that they make sure they have fully complied with the requirements of the regime, including documentation and evidence.

Some common challenges we see are:

• changes in group structure;
• changes in personnel;
• deficiencies in existing controls;
• reliance on non-tax staff;
• manual processes and data input; and
• evidencing and testing of processes.

How we can help

• Whether your business is approaching the size limits for SAO for the first time, or has been within the regime for several years, our specialist SAO team can support you with the relevant compliance:
• preparing or reviewing notifications and certificates;
• identifying qualifying companies and relevant periods covered by the regime;
• carrying out a SAO ‘health-check’ to review existing tax controls and processes and evaluate potential risks and opportunities;
• using existing documentation and controls to provide bespoke and practical control recommendations to be implemented;
• implementation of SAO governance framework, including the preparation of detailed process maps of key tax processes;
• introducing methods to help track SAO compliance and serve as documentary evidence for HMRC. For example, we can support with producing a SAO checklist or implementing technology changes to systems to evidence to the SAO that processes have been followed throughout the year (this can also be linked to the Business Risk Review process for large corporates); and
• where errors have occurred, helping you to understand how they arose, advising on changes to processes to ensure they are not repeated and disclosing to HMRC as necessary.