What is Senior Accounting Officer (SAO)?
The SAO regime requires qualifying companies to demonstrate that their tax accounting arrangements are robust and appropriate. The SAO regime targets an entity’s tax governance and systems, with a view to ensuring correct tax reporting and payment.
A qualifying company must appoint a SAO who, in the company’s reasonable opinion, has overall responsibility for the company’s financial accounting arrangements. Many businesses often choose their Chief Financial Officer to be their SAO.
Which businesses does SAO apply to?
A UK company is a qualifying company for an accounting period if, in the previous financial year, the UK company or the UK group had turnover of more than £200 million and/or a balance sheet total of more than £2 billion. Dormant companies also fall within the SAO rules.
What taxes are included in SAO?
The SAO regimes apply to the tax accounting arrangements for the following taxes:
- Corporation Tax including Quarterly Instalment Payments;
- Value Added Tax;
- Pay As You Earn;
- Insurance Premium Tax;
- Stamp Duty Land Tax;
- Stamp Duty Reserve Tax;
- Petroleum Revenue Tax;
- Customs Duties;
- Excise Duties including Air Passenger Duty; and
- Bank Levy
What are the deadlines for filing SAO certificates and notifying HMRC?
The deadline for notifying HMRC of the nominated SAO and submission of the annual certificate is the same as the deadline for filing the company’s accounts for the financial year at Companies House. For public limited companies, this is six months after the end of the accounting period. For other companies, this is nine months after the end of the accounting period.
What are the SAO penalties?
There are three types of penalty under the SAO regime:
- failure to notify HMRC of the name of the SAO by the deadline: a penalty of £5,000 is chargeable on the company for its financial year;
- failure to take reasonable steps to ensure the company establishes and maintains appropriate tax accounting arrangements: a penalty of £5,000 is chargeable on the SAO for the financial year; and
- failure to provide a certificate to HMRC for a financial year within the deadline, or it is deemed that the information contains a careless or deliberate inaccuracy to HMRC: a penalty of £5,000 is chargeable on the SAO for the financial year.