The Senior Accounting Officer (SAO) legislation mandates that qualifying companies appoint an SAO who is personally responsible for overseeing the establishment and maintenance of appropriate tax frameworks.
SAOs can incur personal fines if they fail to comply with their obligations. With many of our automotive clients nearing or exceeding the SAO threshold, and given the personal liability that can apply, we asked UHY tax partner, Nick Donohue, to provide an overview of the legislation and address some of the key points of which you should be aware.
What is the criteria?
The SAO regime applies to large companies incorporated in the UK, which have a turnover of more than £200m and/or a balance sheet total of more than £2bn in the preceding financial year. For group companies, the thresholds apply to the total turnover and balance sheet of all the UK incorporated companies in the group (excluding any non-UK entities).
If you meet this criteria, the appointment of an SAO is mandatory, and you will be expected to allocate substantial resources to accounting processes and governance to ensure the correct taxes are paid. There is no ‘one-size fits all’ approach, however, so it is crucial to assess your tax operating model and instil practices encompassing effective governance and well-documented processes and controls.
Who should be your SAO?
The SAO must be a director or officer of the company with overall responsibility for financial accounting arrangements. In cases where a group of companies is involved, the SAO role can be filled by a different person for each company, a single individual overseeing all group companies, or multiple individuals acting for different parts of the group. Importantly, as the SAO must hold the position of director or officer within the company, this responsibility cannot be delegated to an agent or adviser.
While only one person can serve as a company’s SAO at any given time, it is possible to have different individuals take on the role throughout a financial year. However, it is in your best interest to identify the SAO early in the financial year to allow the designated individual to promptly assume responsibilities outlined in the SAO provisions.
The next step
This article is an excerpt from our latest edition of the Automotive Outlook. You can read more about the SAO regime and how UHY can help by clicking here.
