Senior Accounting Officer and Implications for Customs Duty

The requirement for a qualifying company to appoint an SAO is outlined in Schedule 46 of the Finance Act 2009. For a company to be considered as qualifying for a financial year, it must meet certain criteria:

be incorporated in the UK per the Companies Act 2006 for the financial year;
exceed a turnover of £200 million, either alone or when aggregated with the turnover of other UK companies in the same group; and
the company must have a relevant balance sheet total for the financial year, either of its own or when its balance sheet total is aggregated with those of other UK companies in the same group, of more than £2 billion or for the proceeding financial year.

The SAO is the appointed person within a company who is responsible for how its financial arrangements, particularly those for its tax accounting (including customs duty), are made. These tax accounting arrangements incorporate the applicable policies, procedures and responsibilities which underpin the management of the tax compliance of the business.

The SAO of a qualifying company must provide a certificate to HMRC after the end of a financial year stating that either:

the company had appropriate tax accounting arrangements throughout the financial year, or
the company did not have appropriate tax accounting arrangements throughout the financial year and provide details of the areas in which the arrangements were not appropriate.

HMRC Senior Accounting Guidance Manual

Why should the Senior Accounting Officer need to consider Customs Duty?

While Customs Duty is included within the list of taxes covered by the SAO requirements, its materiality compared to other taxes can lead to it not being adequately considered when providing the certificate to HMRC. As with the other taxes, the SAO needs to be able to certify that adequate policies, procedures and responsibilities are in place for, among others:

customs standing data
customs transaction validation
customs record retention
understanding and managing customs duty compliance risks in the business
implementing and maintaining adequate controls to mitigate these risks
delegating tasks related to customs duty to third parties

If the SAO fails to comply with the requirements outlined in Schedule 46 of the Finance Act 2009, they may be liable to a penalty of £5,000 for each financial year in which the failure occurs.

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