Since 2009, all large businesses registered in the UK have legally had to appoint a Senior Accounting Officer (SAO) to take responsibility for the company’s tax affairs.
While the qualifying threshold for having to appoint an SAO is a turnover of £200 million, this is based on the previous annual accounting period. Growing companies can find themselves entering SAO jurisdiction for the first time abruptly. As can businesses that increase overall turnover as a result of mergers and acquisitions.
An SAO must be appointed from a company’s own board of directors. It is a natural fit for a Finance Director or CFO, but the role doesn’t have to be taken by a finance specialist. The main responsibilities of an SAO centre around compliance, and particularly the way the business manages tax risk and the associated reporting requirements that go with that.
Specific duties of an SAO include:
- Evidencing that senior leaders in the business understand the tax impact of business decisions.
- Implementing governance procedures covering all relevant UK tax and duty liabilities, and communicating necessary control framework standards and responsibilities as required.
- Monitoring key tax risks throughout the year, taking into account changes in the business and applicable tax legislation.
- Ensuring the business has sufficient resources in place to deliver effective tax compliance.
- Maintaining relationships with HMRC and relevant specialists to keep the effectiveness of SAO controls under continuous review.
- Taking remedial action, including disclosure, whenever tax compliance issues are identified.
The appointed SAO must make a submission, known as a ‘certificate’, to HMRC every year declaring compliance with all the rules laid out under SAO legislation. The certificate can either be ‘unqualified’, which is a legally binding declaration that all tax accounting and risk management arrangements were compliant in the previous tax year, or ‘qualified’, which is a declaration of non-compliance in at least some areas. A qualified certificate must be accompanied by a detailed analysis of what the issues were, and the steps taken to remedy them.
The deadline for the submission of SAO certificates is the same as for the filing of company accounts – nine months from the end of the financial year for private companies, six months for public companies.
Seeking expert support for your SAO
While the position of SAO must be held by a senior figure within the company, there is nothing to stop an appointee delegating tasks or seeking advice from external consultants. In fact, this is clearly covered under the expectation that SAOs ‘maintain relationships with specialists’ in order to ensure effective compliance. The end goal of the SAO regime is to ensure that large companies can stick to the required tax regulations. The appointed officer does not have to do all the work – they are appointed to coordinate tax compliance for their organisation, and can take whatever steps they see fit to achieve that.
Working with external tax specialists makes a lot of sense, providing the technical expertise and know-how SAOs need to remain vigilant and keep tax affairs compliant. At the Xeinadin Group, our services cover relevant areas including accounting, tax planning, financial controls and business advisory, and we can provide strategy advice on how to make the tax regime work for the benefit of your business, not just staying compliant.