Senior Accounting Officer Rules - Sign-Off, Sign-On Or Sign-Out?


When the UK Chancellor, Alistair Darling announced the 2009 Budget on 22 April most commentators were taken by surprise by the inclusion of new rules requiring company officers to personally sign-off the tax accounting policies and processes of their organisation. The rules as enacted differ considerably from the original proposals. This has resulted in confusion, as well as the natural uncertainty arising from such a novel and far-reaching measure.

In this article we will examine the impact of these measures for employers, and especially for those employers with an internationally mobile population. We will also explain how the evolved rules should be approached, what companies need to consider now that the new regime is up and running, and how individuals responsible for payroll, employment taxes and mobility will have a greater level of accountability to the Senior Accounting Officer (SAO) as a result of this novel regime.

Basics The 2009 Finance Act was given Royal Assent on 21 July 2009, heralding the introduction for large groups of a requirement for a nominated Senior Accounting Officer (SAO) to provide annual assurance to HM Revenue and Customs in the UK that appropriate tax accounting policies and processes are in place and maintained. These provisions are comparable to moves by regulatory authorities elsewhere to focus attention on risk and processes, not least the Sarbanes-Oxley Act in the United States. For companies with a 31 July year-end these rules took effect from 1 August 2009, and each month more companies will come into scope as their financial year begins.

Taking Reasonable Steps The rules apply to UK incorporated companies, including the UK operations (and foreign branches) of large UK-parented groups and foreign multinationals, to the extent they have significant subsidiaries in the UK. They have effect for financial years beginning on or after 21 July 2009. In this context large companies/groups are those with turnover of more than £200m or gross assets of more than £2bn. The rules place a personal duty on the SAO of qualifying companies to:

Take reasonable steps to ensure that the company maintains and establishes appropriate tax accounting arrangements; and Provide an annual certification to HMRC stating that appropriate arrangements were in place throughout the period or, if not, identifying any deficiencies. A group SAO who fails to comply with these requirements will suffer a personal penalty of £5,000 in...

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