UK: budget 2009 - taxation - the accountability of the senior accounting officer

Another item related to corporate governance from yesterday's budget and one that was not expected: the Government is to introduce legislation which will require large companies' senior accounting officer to certify personally that adequate controls within the company are in place to prepare accurate tax computations.

It is proposed that this rule will apply to returns due to be made for accounting reference periods beginning on or after the date on which the Finance Bill 2009 receives Royal Assent. HMRC have published a note which provides some - but not much more - information about the new rule. Senior accounting officer is not defined but this will most likely be the company's finance director. Where the rule is breached, penalties will be imposed on the officer personally and the company.

HMRC state that the purpose of the rule is to "ensure that the accounting systems in operation within large companies liable to UK taxes and duties are adequate for the purposes of accurate tax reporting". It will only apply to large companies and large groups of companies (those not defined as small or medium sized under the Companies Act 2006). HMRC also state that "[r]esponsible companies and their senior accounting officers will already have adequate accounting systems in place and these requirements will impose no significant additional burden on those companies or their officers". However, the budget report, at page 11, reveals that the new rule is expected to raise £ 40 million in 2010/11 and £ 50 million in 2011/12.