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HMRC internal manual

Senior Accounting Officer Guidance

Senior Accounting Officer main duty: reasonable steps: where mergers and acquisitions occur

A company that is merged or acquired retains its qualifying or non-qualifying status for its financial year in which it was acquired.

It can only change its status for the following financial year at the earliest. As such a merger or acquisition is no different in effect to a company that changes its status as a result of, say, an increase or decrease in turnover and/or balance sheet assets.

In the case of the merger or acquisition of a non-qualifying company that becomes a qualifying company from the start of the following financial year, the Senior Accounting Officers (SAO’s) responsibility in relation to the main duty only commences on the first day of that following financial year.

We recognise that following a takeover or merger it may take some time for a new SAO to make any changes that are necessary in order to bring accounting arrangements up to the required level. These circumstances will be taken into account in considering what constitutes ‘reasonable steps’ including the time scale over which the changes are made in relation to the issues encountered.