Senior Accounting Officer (SAO)


The Senior Accounting Officer (SAO) regime was introduced in 2009, with a view to ensuring that large companies (broadly, those with a relevant balance sheet total exceeding £2bn and/or a turnover exceeding £200m) take reasonable steps to ensure that “appropriate tax accounting arrangements” are in place.

Additionally, many business are now required to disclose their tax strategy on the internet. This requirement applies to all large companies to whom SAO applies, plus other organisations (e.g. partnerships) of the same size as well as UK registered companies and branches with turnover of less than £200 million which form part of a larger multinational group. The new requirement affects Deloitte and we have now published our UK tax strategy statement. As a result of these requirements, businesses are focused on maintaining appropriate governance and controls to stand behind their published strategy.

From an employer compliance perspective, these requirements can present some unique challenges. Large employers increasingly operate across multiple jurisdictions, often with complex reward structures, and core compliance processes (e.g. payroll, equity reporting) increasingly outsourced or operated offshore.

To add to these challenges, employment taxes processes and procedures are often spread across various parts of an organisation including HR, reward, tax, finance and payroll. It can therefore be difficult to identify roles and responsibilities and specifically to determine who has ownership of employment tax obligations. A lack of clarity around all of this can lead to increased compliance risk. Furthermore if current systems are not capable of supporting the employment tax function this can increase the level of compliance risk, leading to compliance failures.

All of this means that the management of employment taxes compliance is more complex than it may have been in the past and it is important to regularly assess that suitably robust process and procedures are in place.

Employer compliance issues that can impact SAO reporting and tax governance

Inherent risks

  • A business with a group structure where there is no central employment tax management or oversight.
  • Rapid growth businesses where the employment taxes compliance infrastructure has not been able to keep up with the speed of growth in the business.
  • Mature businesses with an internationally mobile workforce and complex remuneration structures.
  • A lack of training, or appropriate skills/knowledge across those individuals responsible for employer compliance operations.

Process risks

  • There are no documented employment tax policies and procedures in place.
  • Staff inputting data are not adequately trained to understand the tax impact of data being incorrectly classified.
  • No central control framework - no one person taking ownership for overall compliance across the entire spectrum of employment taxes.

Systemic risks

  • Lack of automation in the employer compliance process and lots of manual input required.
  • IT systems are unable to provide sufficient functionality e.g. a new accounting, or payroll system not being tax sensitised.
  • No monitoring or oversight of systems, and no ongoing review of systems against legislative changes.

Our advice
Be prepared. In our experience HMRC are increasingly focusing on how Senior Accounting Officer’s determine whether there are appropriate tax accounting arrangements in place in their organisation, particularly around employment tax matters. We understand from discussions with them that they plan to take a similar approach to the Tax Strategy Disclosure requirements, seeking evidence from businesses that they have the controls to stand behind the statements made publically. Our team can provide insight and support either as part of employment tax focused solutions or as part of a cross tax project.

Case study

Company overview: A UK Media Company

Objectives: The client wished to understand in greater detail any employment tax risks which may specifically impact businesses in their sector and which could cause an issue from an SAO perspective.

How we helped: We completed a review of all employment tax processes and procedures from an SAO perspective. As part of the review we mapped and reviewed the client’s internal systems and processes, identified risk areas including ‘Gap’ analysis and made suggestions for improvements ahead of SAO signoff.

Benefits/Outcome: We provided specific recommendations for improving areas of identified weakness.  The implementation of these recommendations provided additional comfort to the client ahead of the SAO signoff procedure.

Senior Account Officer and Employment Tax Governance Services

The Senior Accounting Officer (SAO) regime, which applies to the largest companies in the UK, places an additional compliance obligation on employers. Additionally, many business are now required to disclose their tax strategy on the internet, and as a result are focused on maintaining appropriate governance and controls to stand behind that strategy. These requirements present specific challenges from an employment tax perspective due to the number of different returns and need for interaction between a wide range of stakeholders including payroll, HR, reward, tax and finance.

We work with many of the UK’s largest businesses to assess their current level of compliance, work on the implementation of appropriate tax accounting arrangements where required and support with ongoing testing to maintain the arrangements. Our experience of working with the largest employers as well as our established methodology and interaction with HMRC enables us to benchmark current arrangements and to provide constructive input.

We tailor our support to the needs of each business, providing both employment tax-focused solutions as well as broader holistic tax input working as part of a cross-tax team.

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