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Revised SAO guidance suggests ‘a more robust approach’ from HMRC

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Many of the changes made involve the inclusion of additional wording which appears designed to clarify areas where there has been some confusion in the past, e.g. the inclusion of dormant companies on SAO certificates. The following points are worthy of note, though:

  • There is a significant increase in the volume of procedural guidance relating to the charging of penalties for ‘main duty’ failures or failures for inaccurate certificates, including appeal procedures and how to assess a penalty on a non-resident SAO. We are not aware of penalties having previously been raised for failures by SAOs to comply with their main duty to take reasonable steps to establish and maintain appropriate tax accounting arrangements. The guidance confirms the expectation that HMRC intends to adopt a more robust approach in the future, however. This coincides with the recent HMRC restructuring, the result of which should be that all SAO groups are dealt with by the same HMRC directorate.
  • It is made clear that the company’s notification of the identity of the SAO should be provided separately from the SAO certificate. This is a departure from previous guidance, which indicated that the notification by the company and SAO certificate could both be on the same piece of paper as long as all relevant information was included and it was clear that the document served both purposes.
  • Clarification is provided concerning the roles of customer relationship managers (CRMs); specifically, they are not expected to monitor certification dates for groups. However, any missed deadlines should be taken into account in the group’s risk review.
  • There is new guidance on the steps CRMs are expected to take when the identity of the SAO has not been made known to them before the statutory deadline. The guidance suggests the CRM should take steps to find out who the SAO is and discuss the failure with them in more detail. It also suggests that this may impact the risk rating of the group.
  • The guidance reaffirms that departures from the statutory position, for example in relation to deadlines, must be approved at a senior level within HMRC. This appears indicative of a desire to increase consistency and to move away from the relaxed approach previously adopted by some CRMs.