The Senior Accounting Officer regime: A guide for first-time entrants
Recent prolonged periods of high inflation and rising costs have led many businesses to experience rapid increases in turnover, meaning they could become subject to additional tax governance and reporting obligations under HMRC’s Senior Accounting Officer (SAO) regime.
Who qualifies for the SAO regime?
As businesses grow, many find themselves crossing this threshold for the first time - often triggered through mergers, acquisitions, rapid organic growth or a period of high inflation (as the UK is seeing at the moment).
A company falls within scope if, in the preceding financial year, it had:
- turnover exceeding £200 million;
- and/or balance sheet total exceeding £2 billion.
These thresholds apply either to standalone UK companies or to UK members of a group, based on aggregated (not consolidated) figures.
The SAO regime was introduced as part of HMRC’s strategy to enhance tax governance and accountability among large companies. For those newly within scope, understanding the regime’s requirements and preparing effectively is essential to avoid penalties and reputational risk.
What do qualifying companies and groups need to do?
Once within the scope of the legislation, a company must:
- appoint a Senior Accounting Officer who has overall responsibility for the company’s financial accounting arrangements; and
- notify HMRC of the SAO’s identity annually and submit an SAO certificate confirming whether or not the company maintained appropriate tax accounting arrangements throughout the financial year.
The SAO is personally accountable and must take reasonable steps to ensure robust tax processes are in place across all relevant taxes – including corporation tax, VAT, PAYE, and customs duties – to ensure that the company/group submits accurate tax returns.
Preparing for SAO compliance
For companies entering the regime, preparation should begin well before the notification and certification deadlines (typically aligned with the statutory accounts filing date – 6 months post year-end for listed companies, 9 months for others) so appropriate assurance work can be carried out ahead of filing.
Key steps include:
- Assess whether tax is adequately considered in strategic decision-making. HMRC expects tax governance to be embedded at board level.
- Document all tax-related processes for all in-scope taxes, from data collection to submission of the relevant tax returns. Evaluate whether the finance team has the necessary expertise and capacity.
- Identify gaps or inefficiencies in the tax control framework. Drafting a tax risk and controls matrix can be a useful tool if one is not already in place.
- Implement and test controls to ensure accuracy and completeness of tax returns.
- Ensure systems used for tax reporting are fit for purpose and integrated with financial reporting tools.
Where any deficiencies are found, the business should develop and document a plan to address them - mitigating any tax risk and strengthening governance.
What are the consequences of getting it wrong?
Penalties of £5,000 each can be charged where:
- A company/group fails to notify HMRC of the name of its SAO (payable by the company/group)
- The SAO fails to submit a certificate on time (payable by the SAO personally)
- The SAO submits an incorrect certificate (payable by the SAO personally).
More importantly, poor compliance can trigger deeper HMRC scrutiny, reputational damage, and increased risk ratings under HMRC’s Business Risk Review process.
We’re here to help
Clear oversight of tax provides an opportunity to strengthen governance and align financial processes with best practice. Early preparation, clear documentation and appropriate testing of controls will give businesses the comfort over their SAO filing position, minimising the risk of penalties and improving overall tax governance.
Whether your business is approaching the SAO threshold or already within scope, we’re here to support you. Please get in touch with a tax specialist via the form below.
