“Personal Liability For UK Senior Accounting Officers Over Tax Accounting Arrangements— First Court Decision Provides A Cautionary Tale”

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Source: Shearman & Sterling LLP via mondaq.com, 1 September 2017

“In Kreeson Thathiah v. HMRC, the SAO regime was tested in the courts for the first time and the judgment provides useful practice points as to what “appropriate tax accounting arrangements” might look like in practice.”

Although the decision went against HMRC it “underlines that SAOs need to bear in mind the requirements of the regime and that—based on the Tribunal’s judgment—its requirements will be more stringent for more sophisticated groups with access to greater resources. Particular difficulties can arise in relation to problems that come to light for prior years where the SAO has left the business. Certain key practice points emerge from the case:

  • The group’s internal tax policy should be written and robust, and internal tax accounting procedures and compliance measures should be clearly documented;
  • SAOs should periodically assess the suitability and efficiency of monitoring processes, and this assessment should also be clearly documented;
  • Additional tax resources (external advice, staff, training) should be requested in writing if needed;
  • SAOs should be alive to HMRC’s views in its SAO manual and elsewhere on procedures that should be adopted by particular types of businesses (for instance, sampling of invoices in relation to partially VAT-exempt businesses such as those in the financial services industry). Where these are relevant to the qualifying company, the SAO should ensure that these in particular are covered in written tax accounting policies and appropriately monitored; and
  • A departing SAO may find it prudent to take advice to protect his or her position should an issue emerge in future.”

Source article here



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