HMRC’s Senior Accounting Officer (SAO) regime for large UK corporates may look like just another compliance burden. But you can look at it another way – as a powerful reference point and information source for minimising your tax risk.
On one level, the SAO regime inevitably involves further compliance. “The nominated individual who is the named SAO has to certify to HMRC that the company or companies have appropriate tax accounting arrangements in place throughout the year – or explain why it does not,” says Debbie Jennings, a VAT Director at Moore Stephens. “But it’s the actual processes that underpin the certification that count. And this is where a lot of large corporates could get a lot more benefit – by approaching the SAO requirement in a different way.”
Your organisation comes first
The key, Debbie believes, is to put the compliance aspect to one side and focus on your organisation. Look first at all the various activities, income, expenditure and processes inside the organisation that have a tax impact.
“You could focus on a particular area of tax where the SAO has to give a certificate to HMRC – such as VAT, payroll taxes or corporation tax – and walk through the various steps that lead up to the final tax figure that hits the return,” Debbie says. “Who does what at each stage? What checks and controls are in place to spot any errors? Are the people involved applying a sense-check to the numbers they produce?” Understanding and documenting the processes helps to clarify whether the tax figures being produced can be considered robust – or if they are not, what needs to change. After all, a set of numbers are only as good as the processes that drive their calculation.
Cascading the understanding and responsibilities
“Analysing your organisation’s processes in this way helps everyone to understand the importance of their actions,” Debbie says. “You cascade this understanding and make it relevant to them – and the sense of overall shared responsibility – throughout the organisation. When an individual is following a process properly or reviewing the tax data being produced by a system, they are playing an important part in minimising the organisation’s tax risk. This isn’t only important for enabling the SAO to make the necessary compliance certification. It’s also important for the financial health of the business.”
Adding SAO certification as the top layer
When you have reviewed the various processes underpinning your tax numbers, and gained confidence that checks and controls are being applied, making the SAO certification simply becomes a final compliance layer sitting on top of all this activity. It is simply the final requirement at the strategic level. “HMRC isn’t expecting perfection – but it is looking for solid, realistic systems that operate on an ongoing basis,” Debbie says. “And it’s these types of systems that mitigate your tax risk, as well as supporting your SAO certification.”
How Moore Stephens can help
We put your organisation at the centre of our SAO support and advice. We start by focusing on your systems and processes – not with the regulatory requirements and the detailed HMRC guidance. In this way, we make sure you are gaining the reassurance you need about your own particular tax controls and tax risk. When you gain that reassurance for yourself, the SAO certification requirement becomes a natural next step.
We ‘walk through’ your systems and controls, establishing who does what and when. In this way we build awareness across your organisation of the importance of each action for minimising your tax risk. We bring a practical and pragmatic approach, helping you create the systems and controls you need, rather than trying to fit a rigid regulatory structure on your business. Our aim is to communicate effectively with everyone and in their own area. Our approach does not use technical jargon or ‘tax speak’, and is tailored to you. We advise organisations already covered by the SAO regime, but if your organisation is currently just below the £200 million per annum turnover threshold and expected to cross it in future, we can help you prepare. We can assess and improve your tax systems and controls as necessary, making sure you gain maximum organisational benefit. We also help smaller organisations to gain peace of mind over their tax risks – even though they face no SAO requirements.
For further information, please contact Debbie
or your usual Moore Stephens contact.