New HMRC guidance in relation to the SAO regime

New HMRC guidance in relation to the SAO Regime

The guidance clarifies HMRC’s existing views and confirms that going forward, SAO certificates can be submitted electronically.

Director, Head of Tax Governance for National Markets

KPMG in the UK

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On 1 June 2016 HMRC published Revenue & Customs Brief 12(2016) which sets out further guidance in relation to the operation of the Senior Accounting Officer (SAO) regime. Most of the additions to the already published guidance represent clarification of HMRC’s existing views, but there is one significant change, namely a welcome agreement that HMRC will accept the submission of SAO certificates through ‘any recognised paper or electronic format e.g. letter, fax, email, shared workspace’, provided that this includes the ‘identifiable signature’ of the SAO.

This relaxes the requirement that HMRC must be in possession of a hard copy of the certificate by the relevant deadline and it is therefore welcome, although many may find it disappointing that other relatively inconsequential procedural offences will continue to attract what can be seen as a disproportionate penalty. Examples are the inadvertent omission of dormant companies from the notification/certificate, and submissions that are late by a few days.

New clarification has been provided concerning the circumstances in which HMRC will accept that failures are attributable to reasonable excuse, including major changes affecting the company, its systems or the personnel who are key to its systems and governance, and personal issues affecting the SAO such as bereavement or illness, but clearly this does not include simple oversight.

  • The other areas in which clarification has now been provided are as follows:
  • New examples of how aggregation should be applied within a group. There are two particular points of interest here:
    • Example 5 at SAOG11280 illustrates the transparent nature of an LLP or LLC in an SAO context, the key point being that there are circumstances in which these cannot simply be disregarded.

    • Example 7 reiterates HMRC’s view that whilst a private equity (PE) owned group should have systems to identify and communicate obligations under the SAO regime, the legal obligation to comply rests with the individual company;
  • New emphasis is placed upon the fact that the SAO role cannot be delegated;
  • There is confirmation that relevant time limits apply on a company by company basis, and that they apply to each accounting period irrespective of its length;
  • Clarification is provided concerning the role of the SAO when a company is struck off - specifically, the SAO in place at the time of the striking off retains the obligation to submit certificates; and
  • Various amendments have been made to reflect changes in HMRC’s internal organisation.

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