UK: publication of the Finance Bill 2009 - the duties of senior accounting officers

The Finance Bill 2009 was published yesterday. A copy in PDF is available on the Parliament website here. Explanatory notes have been published here by HM Treasury. The Bill provides further information about the new duty that will be imposed on the senior accounting officer of large companies with regard to taxation accounting. The duty is contained in Schedule 46 of the Bill, where senior accounting officer is defined as "the director or officer of the company who has overall responsibility for the company's financial accounting arrangements". This person's main duty is set out as follows:

1 (1) The senior accounting officer of a large company must take reasonable steps to ensure that the company and each of its subsidiaries (if any) establishes and maintains appropriate tax accounting arrangements.

1 (2) The senior accounting officer of a large company must, in particular, take reasonable steps -

(a) to monitor the accounting arrangements of the company and its subsidiaries (if any), and
(b) to identify any respects in which those arrangements are not appropriate tax accounting arrangements".

Failure to meet this duty will result in a penalty of £ 5,000. The senior accounting officer will also be required to provide a certificate to HMRC stating whether the company has appropriate tax accounting arrangements in place. If arrangements are not in place, an explanation must be provided to HMRC and the company's auditor. Appropriate tax accounting arrangements are defined as "accounting arrangements that enable the liability to taxes and duties of the company and its subsidiaries (if any) to be calculated accurately".

Schedule 46 also provides that liability will not arise if the senior accounting officer satisfies HMRC or, on appeal, a Tribunal, that there was a reasonable excuse for the failure. It is explained that an insufficiency of funds will not be a reasonable excuse unless attributable to events outside of the officer's control. It is also explained that reliance on another will not be a reasonable excuse unless the officer took reasonable care to avoid the failure.