SAO – pitfalls to watch out for in group structures


HMRC are getting tougher on businesses within the SAO regime and are now applying penalties more rigidly. Due to the complexities of the qualifying criteria companies and SAOs (remember SAOs can be personally liable for penalties in certain circumstances) may unwittingly find themselves subject to penalties for failing to meet the SAO requirements.

It is easy to fall into one of the traps listed below when a business is part of a group structure or is subject to a restructuring involving an acquisition or disposal.  

The criteria for a company to fall within the scope of the SAO legislation is as follows:

It must:

  • Be a company incorporated in the UK (in accordance with the Companies Act 2006) for the financial year, and
  • Either, alone, or when its results are aggregated with other UK companies in the same group, have:
  • a turnover of more than £200 million, and/or
  • a relevant balance sheet total of more than £2 billion for the preceding financial year.


Common traps that businesses can miss include:

  • A UK company not realising that, despite the fact that its own turnover is below the threshold, it is caught by the requirements as a result of its association with other UK companies due to a common parent company, often an overseas parent.
  • Dormant companies also fall within the SAO regime where they are associated with a group above one of the qualifying thresholds.
  • In an acquisition situation responsibility for filing the SAO certificate falls to the SAO in place at the time the certificate is due and not the person holding the SAO post during the financial year covered by the certificate. The SAO required to file the certificate may not have held the post at any point during the period covered by the certificate but is still required to take a view on whether the tax accounting arrangements in place were appropriate! This point can easily be missed particularly if the acquiring group does not fall within the SAO regime.
  • In light of the previous point the SAO of a company being disposed of could find themselves subject to a penalty if the new SAO files a return stating the main duty was not complied with during their period of responsibility.


It is therefore vital that UK businesses always consider SAO requirements especially during a period of group restructuring. It is good practice to ensure that SAO issues are covered off as part of any due diligence process. 

For example, in an acquisition or disposal scenario it is recommended that details of the old and new SAO are documented, that evidence demonstrating SAO compliance up to the point of sale is provided and that any warranties considered necessary are included. 

By following these recommendations companies and there SAOs (new and old) will hopefully avoid any penalty shocks.

For more information on the SAO regime, download our White Paper “Taking the SAO Regime Seriously”.