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HMRC internal manual

Senior Accounting Officer Guidance

HM Revenue & Customs
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Tax compliance risk management process for customers managed by Large Business: discussing and reviewing the main duty

A Senior Accounting Officer (SAO) of a qualifying company is responsible for carrying out the main duty. That is, the SAO is responsible for taking reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements.

A Customer Relationship Manager (CRM) must ask about the tax accounting arrangements as part of ongoing discussions to understand how the company approaches the task of ensuring tax liabilities are calculated accurately.

Such a discussion might cover the overall accounting arrangements within the company. For example, it might explore

  • the nature of the business-wide policies, processes, reviewing and reporting undertaken, and
  • how the SAO or company identify or are alerted to areas of the accounting arrangements that might present or mitigate a tax compliance risk.

In the course of such a discussion a CRM can learn the steps that are being taken within the company to establish and maintain the tax accounting arrangements. The CRM should be prepared to discuss the tax treatment of particular items with the company so that the company can put in place the tax accounting arrangements and apply that treatment. However, it remains the responsibility of the SAO to establish whether or not the company had appropriate tax accounting arrangements throughout the financial year.

Whether the resultant certificate is qualified or unqualified, the certificate by itself will not necessarily mean that the SAO has failed in their main duty. Where the CRM enters into further discussion, if the discussion is prompted by the content of that certificate, this will inform the CRM’s view as to

  • whether the SAO has failed in his main duty, see SAOG14000, and
  • whether the certificate, see SAOG15000, the SAO has submitted is accurate.

An open, collaborative dialogue is key. A CRM can obtain advice, see SAOG16210, if they are unsure about aspects of a company’s tax accounting arrangements.

However, there may be differences of opinion on what tax accounting arrangements are appropriate or what the reasonable steps are for the company’s situation. Where these exist, the CRM must work through these in a reasonable and professional manner to understand the difference in opinion and why it has arisen.

Where, after taking any necessary advice, there are still differences and the CRM believes that the SAO or company may not have met the requirements, the CRM must escalate the issue, see SAOG19200, to the Deputy Director in Large Business.

If it appears that a penalty may be due it is important that the CRM follows the penalty procedure as soon as the failure has come to their attention. This is because there is a restrictive time limit, see SAOG21200, for taking penalty action. Following the ordered steps set out at SAOG19000 the CRM must discuss the potential penalty situation with their Deputy Director and the Penalties Consistency Panel, before then explaining to the SAO (separately from other risks being addressed to the company/group) that

  • there has been a failure and
  • they intend to charge a penalty.

A failure ‘comes to the attention’ of a HMRC officer when that officer knows that there has been a failure. So if a CRM finds during a discussion that the SAO has not taken reasonable steps to ensure the tax accounting arrangements are appropriate, the date of the discussion is the date when the failure comes to their attention.