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HMRC internal manual

Senior Accounting Officer Guidance

Senior Accounting Officer Main Duty: reasonable steps: considering opening balances and standing data

The Senior Accounting Officer (SAO) provisions in Schedule 46 FA09 apply for financial years beginning on or after 21 July 2009. The legislation does not apply to earlier financial years.

However, certain data and information that has been input, collated and/or retained during earlier financial years will be used in the calculation of tax liabilities for financial years covered by this legislation. In particular, brought forward balances and standing data will be key in calculating the tax liabilities of later financial years. While some level of checking of this data might be appropriate at commencement it is unlikely that companies would generally need to revisit this.

This is also the case where any company comes within the SAO provisions for the first time.

Opening balances - corporation tax

For corporation tax purposes, various opening balances feature in the calculation of a tax liability for a financial year. For example, brought forward tax written down values for fixed assets can have a significant impact on a company’s tax liability. The transactions giving rise to those brought forward balances will have occurred over many years.

In taking ‘reasonable steps’ to establish appropriate tax accounting arrangements we expect companies to ensure that the brought forward balances reconcile to the preceding year’s computation and that any identified errors from earlier years are properly reflected. We do not expect companies to revisit the value of any opening balances at the date of commencement of the SAO provisions.

Opening balances - PAYE

Employer taxes are generally calculated on a cumulative basis for a tax year. A tax year is likely to straddle a company’s financial year. So some transactions and payments included in the calculation of tax for a tax year may fall before the commencement of the SAO provisions.

Where this is the case we expect a company to be able to rely on the cumulative position at the date that the legislation starts to apply. For example, where the company has a December year end it should be able to rely on the calculations and data for the period to December 2009 in calculating the amount payable to HMRC for January 2010 onwards.

Standing data

In a number of tax areas, the calculations rely on data held within systems (standing data) that was input some years ago. We normally expect that companies already have appropriate arrangements in place to ensure that this standing data is correct given that any errors in it are, by definition, systemic. Where companies do not already have such arrangements in place we expect them to take reasonable steps to determine and implement these from commencement to be able to fulfil the main duty. However, this is unlikely to require them to revisit all of the standing data at the start of the first financial year.

See SAOG14450 for some examples of standing data.