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The SAO Certificate

What you may wish to include and how much to disclose

CertificateA key question for your SAO is what, if any of the identified issues during the first year of the regime might be disclosable in the SAO certificate, or indeed, to HMRC generally? In our recent poll:

  • 19% stated that they would be submitting a qualified SAO certificate setting out either errors previously disclosed to HMRC and/or issues identified as part of their review of existing tax accounting arrangements;
  • 40% confirmed that they had identified errors or weaknesses through their reviews or other activity but were comfortable in providing an unqualified certificate (perhaps because the issues were considered immaterial); and
  • A further 12% were undecided as to the nature of their certificate.

Completing the certificate

First the basics. HMRC guidance provides a suggested format and wording for the certificate, which can be found below as well as in paragraphs 34-37 of the HMRC guidance.

“I….. as Senior Accounting Officer of the qualifying company /companies listed below, hereby certify that to the best of my knowledge and belief throughout the company’s or companies’ financial year ended [….] the company/companies had appropriate tax accounting arrangements or to the extent it/they did not an explanation is provided below.”

The certificate should be provided to the CRM for the company or companies covered and must be submitted no later than the end of the period for filing the accounts for the financial year (or such later time as allowed by HMRC).

What to disclose?

Based on our interpretation of the legislation and currently available tax authority guidance, discussions with HMRC’s policy team and understanding of emerging practice, we set out below our thoughts on disclosure. However, you should of course make an assessment made on your individual circumstances and seek additional guidance as you feel is appropriate in reaching your own decision.

There are two main issues that we believe should be disclosed within the certificate:

  • Identified errors - Where it has been identified that appropriate tax accounting arrangements are not in place throughout the financial year and these have resulted in material inaccuracies in calculated tax liabilities.
  • Control weaknesses that are likely to have resulted in an error - Where it has been identified that appropriate tax accounting arrangements were not in place throughout the financial year and these are likely to have resulted in material inaccuracies in calculated tax liabilities although the nature/extent of the inaccuracy may not have been confirmed.


However, where it has been identified that appropriate tax accounting arrangements are not in place but there are ‘compensating controls’ to prevent a material error, then these may not need to be disclosed. For example, it could be that a company, as part of an SAO review, identifies a risk relating to poor documentation of the corporate tax compliance process. No error is understood to have arisen due to the incumbent team having a good informal understanding of their roles, the underlying systems and the transactions in the year. Thus, they may decide to put some documentation in place in future to manage against the risk of those people leaving and practices deteriorating but, for the time being, the arrangements are sound.

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