Tax compliance risk management process for customers managed by Mid-sized Business: checking the timely notification of SAO details
It will generally be clear whether a company meets the conditions to be a qualifying company, see SAOG11000. However,
- some situations may be borderline
- there may be changes in a financial year that mean the business is different from HMRCs previous experience of it and
- some companies will meet the conditions for the first time as they grow and develop their business.
It is for a company to determine whether it is a qualifying company and therefore whether it must notify HMRC with the details of its Senior Accounting Officer (SAO).
Where the Mid-Sized Business Customer Engagement Team (CET) or Caseworker expects a notification from a company but it comes to the attention of any HMRC officer at some time that they have not received one by the time limit, see SAOG13400, they must consider whether a penalty might be due, see SAOG18300, and, if necessary, take the appropriate penalty action, see SAOG19000. They must also consider this as part of the risk assessment and raise this matter amongst the other risks.
Whether or not a penalty is issued for failure to notify HMRC of the SAO, a company is still required to provide that information. The CET or Caseworker should pursue this through reasonable dialogue ensuring that the company is aware that ongoing failure to provide the required information will also be taken into account in the risk assessment of the company or group. If, despite this, the notification is still not forthcoming the CET or Caseworker must contact their nominated business contact for advice on how to proceed.
Where the CET receives a notification that is unexpected they must check that the company is a qualifying company, see SAOG11000. If it appears that it is not, the CET or Caseworker must take this up with the company. If it is then determined that the company is not a qualifying company the notification should be ignored. If the company is determined to be a qualifying company, the CET or Caseworker should proceed as below.
Checking a notification
Where the CET receives a notification from a qualifying company they must
- check that the notification contains the necessary information, see SAOG13200, and
- check whether the notification is timely.
If the notification was late the CET must consider whether a penalty might be due, see SAOG18300, and if necessary take the appropriate penalty action, see SAOG19000, and take this lateness into account in future risk assessing.
If it appears that a penalty may be due it is important that the CET or Caseworker follows the correct penalty procedure as soon as the failure has come to the attention of an officer of HMRC. This is because there is a restrictive time limit for taking penalty action. Following the ordered steps set out at SAOG19000 the CET or Caseworker must discuss the potential penalty situation with their Assistant Director and obtain the approval of the Penalties Consistency Panel, before then explaining to the company 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, for example, if the CET receives a late notification of SAO details and reads it on the date of receipt, that is, the date when the failure comes to their attention. Or, if the CET receives no notification and only becomes aware that there should have been one on the day when they carry out a risk assessment, then that is the date when the failure comes to their attention. In such examples, the failure happens the day after the time limit for providing the notification expired, but the CET need not monitor provision of notification for a company or group on the dates when an apparent failure could arise.