Senior Accounting Officer (SAO) guidance

SAO’s can incur personal fines if they fail to comply with their obligations. The SAO must give HMRC a certificate each financial year stating whether the company had appropriate tax accounting arrangements. If the company did not have appropriate tax accounting arrangements, they must also explain what the shortcomings were. The certificate must comply with certain prescribed specifications and must be unambiguous.

Which companies must appoint an SAO?

A company must appoint an SAO if it is a company incorporated in the UK for the financial year; and it has a turnover of more than £200 million and/or a relevant balance sheet total of more than £2 billion, either alone or when its results are aggregated with other UK companies in the same group, for the preceding financial year. Dormant companies in a group, as well as active ones, must comply with the obligations.

Who should the SAO be?

The SAO is the director or officer of a company who has overall responsibility for the company’s financial accounting arrangements. Where a group of companies is involved, there may be a different person who acts as SAO for each company, a single person who acts as SAO for all the group companies or several different persons who act as SAOs for different parts of the group. 

Each financial year a qualifying company must notify the name of its SAO to HMRC. Only one person can be SAO at any one time, but the company may have more than one SAO over the course of a financial year. As the company must notify the details of all persons who have been its SAO over the course of a financial year and can supply only one notification for a financial year, it cannot make a notification to HMRC until the financial year has ended.

Public limited companies must notify HMRC within six months after the end of the accounting period. Other companies must notify within nine months after the end of the accounting period.

What must the SAO do?

An SAO’s main duty is to take reasonable steps to ensure the company establishes and maintains appropriate tax accounting arrangements. An SAO must monitor the arrangements and identify any respects in which the arrangements fall short of the requirement.

Tax accounting arrangements are the framework of responsibilities, policies, appropriate people, and procedures in place for managing the tax compliance risk, and the systems and processes which put this framework into practice.

Reasonable steps might include establishing and maintaining processes to ensure compliance with legal requirements and periodically checking and testing systems, controls, process flows and transactions.

An SAO would also be expected to ensure staff and any third party to whom responsibilities are delegated are appropriately trained, have the necessary guidance, qualifications, knowledge and experience needed to carry out their functions.

The SAO obligations apply in respect of corporation tax, VAT, PAYE, insurance premium tax SDLT, SDRT, petroleum revenue tax, customs duties, excise duties including air passenger duty and bank levy. Note that they do not apply in relation to national insurance contributions.


A penalty may be charged on a qualifying company if it fails to notify the name of its SAO within certain timescales. A penalty may be chargeable on an SAO personally if they fail to meet their main duty, fail to give HMRC a certificate within the required timescale, or they provide a timely certificate that contains a careless or deliberate inaccuracy.

Each of these penalties is a fixed amount of £5,000.

A person is not liable to a penalty for a failure to notify details of an SAO, a failure to carry out the main duty, or a failure to provide a certificate on time, if they satisfy HMRC that they have a reasonable excuse, such as un unforeseeable event, for the failure, and they put right the failure without unreasonable delay after the excuse has ended. Reasonable excuse does not apply to a careless or deliberate inaccuracy in an SAO certificate.
HMRC guidance also says that HMRC will "not normally seek to assess penalties where a group of companies or an SAO omitted details of dormant companies where a risk assessment indicates minimal requirement for tax accounting arrangements". However, HMRC will only consider a company to be dormant for these purposes if it has no profits or income and no assets capable of producing profits, income or gains.

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