Senior Accounting Officer compliance applies to dormant companies

Wed 18 Oct 2017

Where the senior accounting officer (SAO) rules apply, obligations involving notification, monitoring and certification are relevant for each UK incorporated company. Importantly, this includes dormant companies.

There are three sets of £5,000 penalties for non-compliance, two of which apply to the individual SAO (in that context, the FTT case reported in September may be of interest).  These penalties can apply to each company separately, though only once for a particular individual SAO of a group for a financial year and once for a group for a financial year in relation to company penalties.  It is therefore important that SAO’s and their groups should ensure all relevant group companies have been covered before the filing deadline.

Background

The obligation to follow SAO rules applies to companies or groups with UK incorporated companies where the aggregate figures for UK incorporated companies meets one of the following two measures:

• turnover – more than £200m; or
• gross balance sheet assets –  more than £2bn.

If these thresholds are met, then there are obligations in respect of each UK incorporated company, including dormant companies. The obligations are:

• Each qualifying company (UK incorporated) must notify HMRC of the name of it its SAO for a particular year, before the statutory filing date for the financial statements for that year.  The deadline is nine months after the year end for a private limited company and six months after the year end for a public limited company;
• The SAO must take reasonable steps to ensure the company establishes and maintains appropriate tax accounting arrangements.  This will include appropriate monitoring of these arrangements, and identification of instances which do not meet the standard;
• The SAO must submit a certificate covering each qualifying company stating whether the company had appropriate tax accounting arrangements throughout the financial year (an unqualified certificate) and if not, give an explanation of those tax accounting arrangements that were inappropriate (a qualified certificate).  The deadline for submitting this is the statutory filing date for the financial statements for that year.

Penalties

There are three penalties that can apply:

• £5,000 on the company for failure to notify HMRC of the name of the individual who is the SAO;
• £5,000 on the SAO for failure to comply with the main duty of taking reasonable steps to ensure appropriate tax accounting arrangements are established and maintained;
• £5,000 on the SAO for failure to provide HMRC with a certificate, or for providing a certificate with a careless or deliberate error.

The main features of the SAO regime are described here.  For a further discussion of the issues around the senior accounting officer regime and other large company tax reporting obligations, please get in touch with the Mazars Corporate Tax or Tax Investigations team.