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HMRC internal manual

Senior Accounting Officer Guidance

Tax compliance risk management process for customers managed by Large Business: disclosing a risk raised by a certificate to the company

The provision of the Senior Accounting Officer (SAO) certificate is a statutory requirement. Once it has been received the certificate is no different from any other piece of information acquired by HMRC. Section 18(2)(a) Commissioners for Revenue and Customs Act 2005 provides that such information may be disclosed if that disclosure is made for the purposes of a function of HMRC. That function will apply if there is a business need to disclose the information and by making that disclosure there will be a benefit to HMRC.

Given the aim to have a transparent process with our large groups and companies including being open about the risk assessment process, if a risk has been identified as a result of the SAO certificate then a Customer Compliance Manager (CCM) should normally explain this to the customer. This openness will lead more quickly to the discussion and settlement of relevant risks thereby leading to a benefit to HMRC.

It is not expected that the contents of the certificate would come as any surprise to the company as it is unlikely that only the SAO would be aware of any deficiencies in the company’s accounting arrangements.

However the CCM may in some situations, with or without the SAO’s input, consider that disclosing the information on the certificate would cause difficulties for the SAO. This may be, for example, where their certificate indicates that a predecessor has failed in the main duty and is therefore liable to a penalty. In that circumstance the CCM must discuss the matter with the SAO. If the SAO is still unwilling for HMRC to make a disclosure to the company and where HMRC can effectively pursue the relevant issues without making that disclosure, the CCM must not make a disclosure.

WARNING: This openness does not extend to informing the company or group that we have charged the SAO a penalty or penalties or that we intend to do so, but see SAOG18800.

If the risk is connected to a potential problem with the tax accounting arrangements and the CCM decides that the amount of tax at risk is sufficient to justify raising this with the company the CCM should bear in mind that they are

  • not only checking to see that the tax position is correct
  • but also checking to see that the SAO provisions have been satisfied.

Accordingly the CCM must discuss with the company the tax accounting arrangements that were in place in relation to the issue in question. This is important because in due course this information will enable the CCM to decide whether the SAO has met the main duty.