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HMRC internal manual

Senior Accounting Officer Guidance

Senior Accounting Officer main duty: reasonable steps: Example 6 - takeover or merger

The examples in SAOG14510 - 14515 illustrate some situations where reasonable steps are taken. The examples illustrate the point but are not exhaustive.

Example 6 - Takeover or merger

A qualifying company is purchased by new owners shortly after the beginning of its financial year. A new person is identified as its Senior Accounting Officer (SAO) at that point. HMRC makes an enquiry into the company’s return for the financial year in which the take over took place and finds errors in its PAYE systems.

The Customer Compliance Manager (CCM) or Mid-sized Business Caseworker obtains documentation that shows that shortcomings were drawn to the attention of the new SAO at an early point after the takeover. However, the SAO cannot show that they took or commenced any action to put this right. They have not taken reasonable steps.

If, in this example, the takeover had taken place near to the end of the financial year and the SAO had commissioned a review into the failings of the PAYE system and produced a report ready for action, we would accept that they have taken reasonable steps thus far and they would satisfy the main duty for the year of takeover. Of course, in our consideration of whether they have taken reasonable steps for the following year, we would look at whether the actions contained in the report had in fact been put into operation and whether they had produced the corrective effect.