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HMRC internal manual

Senior Accounting Officer Guidance

Senior Accounting Officer main duty: appropriate tax accounting arrangements: what is an appropriate tax accounting arrangement

It is not sufficient just to have tax accounting arrangements. The Senior Accounting Officer (SAO) must take reasonable steps to ensure that these arrangements are appropriate. That requires a consideration of the care and accuracy with which these arrangements are designed, used and monitored, see SAOG14400.

Whether tax accounting arrangements are appropriate will depend on factors such as the size, complexity and nature of the business. For example, in the case of a dormant company the SAO may simply need to maintain an awareness of whether the company has remained dormant throughout the financial year.

Appropriate tax accounting arrangements must allow the company’s tax liabilities to be calculated accurately in all material respects. If the company’s monitoring processes or our enquiries show that the tax liability has not been calculated accurately in all material respects or that the business is persistently unable to make its returns on time, this may signal a deficiency in the company’s tax accounting arrangements.

The SAO provisions are not about getting returns in on time, although we expect that and there are other provisions to cover that. They are about ensuring that the tax accounting arrangements of the company allow accurate calculation of its tax liabilities. A late return is not, therefore, of itself evidence that the SAO has failed the main duty. However, Customer Compliance Managers (CCMs) or the Mid-sized Business Customer Engagement Team (CET) might ask themselves whether the late return was caused by the lack of the necessary arrangements to satisfy the main duty.