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The SAO (Senior Accounting Officer) guidance was launched in 2009. It facilitates HMRC in the issuance of £5,000 penalties for those companies who were unable to account for their expenses and income with respect to the specified requirements.

These regulations are applicable for companies in the UK who get more than £200 million in turnover or are used to have a balance sheet with more than £2 billion from the previous financial year.

Companies who are qualified have to appoint an individual officer or director—typically the CFO or FD—so they can serve the role of a high-ranked accounting officer, one that is tasked with managing the accounting tax affairs of the company.

For a few years, HMRC did not use this SAO regime. For the first three years, they did not fine anyone. However, after 2012, the department has adopted an aggressive approach and began to fine many companies.

Since then, the fine figures are increasing at a rapid rate. Compared to the last year, more than 22% of senior finance directors and CFO were fined, an increase from 125 fines in 2018 to 152 in 2019. Back in 2012/2013, the number of fines was only 46.

As a result, the tax department has got its fair share of criticisms for enforcing the SAO regime. During the first tribunal hearing regarding SAO penalties, the judge explained that the approach to use the regime as a ‘one-size fits all basis” should be prevented. Instead, HMRC should take different approaches to assess those qualifying companies who have sophisticated and large-scale systems and departments in comparison to those companies that barely fit the qualifying criteria.

Nonetheless, HMRC maintains that they are just implementing the law and the increase fine figures do not indicate a crackdown. However, Jason Collins from Pinsent Masons believes that this may not be the case. He stated that,

“It’s not just the SAO regime where we’re seeing more active enforcement. It’s across the board. HMRC is definitely spending more time and money scrutinising the affairs of the UK’s biggest businesses.”

Moreover, Collins was quick to note that the rising SAO fines trend seems hard to go down any sooner—this is because of the new off-payroll working rules by the HMRC that are supposed to go in effect by April 2020.

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