Senior Accounting Officer Regime

06 August 2017

The Senior Accounting Officer (“SAO”) regime is aimed at reducing the tax gap through improvements in businesses’ tax governance and systems. The measure requires a qualifying company to identify who its Senior Accounting Officer is. The Senior Accounting Officers must take steps to ensure that the companies they are responsible for establish and maintain appropriate tax accounting arrangements.

Which Companies Are Affected?

A UK incorporated company is within the SAO regime if it meets one or both of the following size limits. When considering a company’s size, its results are aggregated with other UK companies in the same group.

  • Annual turnover of more than £200 million.
  • Gross balance sheet assets in excess of £2bn.

The main SAO duties

The main duty of the Senior Accounting Officer is to take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements. SAOs must provide personal certification that their accounting systems are capable of delivering accurate tax reporting across all major taxes, such as Corporation Tax, PAYE and VAT. 

SAOs must:

  • Monitor the accounting arrangements of the company.
  • Identify any areas in which those arrangements are not appropriate tax accounting arrangements.

Other SAO requirements

A qualifying company must notify the name of its SAO to HMRC. This must be by separate written notification for each financial year for which it is a qualifying company.

The SAO must provide a certificate to HMRC after the end of the financial year of a qualifying company. In the certificate, the SAO must state that either:

  • The company had appropriate tax accounting arrangements throughout the financial year, or
  • The company did not have appropriate tax accounting arrangements throughout the financial year and give details about the areas in which the arrangements were not appropriate.

Areas of consideration for the SAO before signing off the SAO certificate:

  • Which entities (including dormant companies) should the certificate cover?
  • The relevant taxes for the businesses operated by those entities.
  • The key tax accounting processes for each tax.
  • Which processes vary in separate divisions of the business for which the SAO is responsible?
  • Identification and evaluation of critical tax controls, supported by sufficient and appropriate documentation?
  • Are there any disclosures or voluntary declarations which have been made in the respective year?
  • Has there been any relevant HMRC correspondence or review highlighting concerns regarding material tax accounting processes?

Monitoring requirement – key issues

  • Have the key tax accounting processes been risk assessed?
  • Is there a risk assessment process in place to cover all material operations and processes and isolating the principal risks? Is this regularly reviewed and updated to reflect business changes?
  • Is documentation held detailing the nature of any in-year review, findings, implications and any management actions?

Is the company in a position to present the findings of the annual SAO process (including testing) to HMRC in a robust and concise manner?


The following three penalties may apply:

  • £5,000 for not taking reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements (SAO personally liable)
  • £5,000 for failure to provide a certificate, or providing an incorrect certificate (SAO personally liable)
  • £5,000 for failure to notify HMRC of the identity of the SAO (company liable). 

How MHA MacIntyre Hudson can help

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.  Our experts, led by Tax Partner Gareth Peters, have vast experience in implementing SAO projects. We have developed a unique approach to help companies and Senior Accounting Officers to remain compliant whilst adding value by proactively mitigating areas of risk.

For more information please get in touch with Gareth Peters or send us an online enquiry.