Written by: Keith Tully
Published: 30th November 2017
HMRC is increasingly targeting senior company executives with fines in its efforts to clamp down on corporate accounting irregularities and failings.
According to the latest data on the subject, the UK’s tax-gathering body has increased the number of senior executives it has issued fines to in relation to corporate accountancy failings by around 150 per cent over the course of the past five years.
HMRC was given the power to issue these fines through what’s known as the Senior Accounting Officer (SAO) regime.
Figures from the law firm Pinsent Masons suggest that 115 finance directors and other high ranking executives of big companies were hit with SAO fines over the course of last year.
The SAO regime came into effect in 2009 and it allows HMRC to issue executives with fines of £5,000 when it is convinced that an individual has failed to properly account for income or expenses in their capacity as company representatives.
Only companies with either turnovers worth in excess of £200 million or balance sheets accounting for more than £2 billion come under the purview of the SAO rules but those who do are obliged to appoint an individual as their SAO.
Once appointed to that role, the relevant individual effectively takes responsibility for ensuring that all income and expenses are properly accounted for in line with HMRC guidelines, with £5,000 fines representing the penalty for any failings that happen on their watch.
In the year 2012-13, there were only 46 such fines issued by HMRC but that figure has risen considerably over the course of recent years.
According to Jason Collins from Pinsent Masons, HMRC is going after the most senior people it can possibly take action against in its efforts to be strict on financial failings at big companies.
Mr Collins has also said that increasingly issuing fines against financial directors represents a “definite escalation of HMRC’s tactics”.
“Given the scale and complexity of the money flows in large businesses, simple errors in the finance department can result in miss-reporting and subsequent fines,” he said.
“Finance directors need to understand all the requirements set out by HMRC. The policies, procedures and systems in place to ensure tax compliance need to be carefully monitored to avoid the potential for mistakes.”
13th January 2021
Retailers in the UK endured what was statistically their worst year on record in terms of sales growth during 2020.Read More
11th January 2021
As many as 250,000 small firms could close this year unless government action is taken to prevent such a scenario from happening.Read More