SAOG17710 - Tax compliance risk management process for customers managed by Mid-sized Business: considering a certificate - specific situations

The guidance for considering certificates in all situations is at SAOG16700.

Each case must be judged on its merits but the table below sets out the situations and actions that might arise in connection with an enquiry in relation to the different types of certificate expected and provided. The expectations can arise from the experience of previous years or from information provided by the company and/or the Senior Accounting Officers (SAO(s)) to the Mid-sized Business Customer Engagement Team CET.

Situation 1

The certificate is unqualified as expected

Action

A Caseworker must reconsider the certificate if an enquiry process indicates that it should have been qualified and so is inaccurate. This may also indicate that the main duty has not been complied with either.

Situation 2

The certificate is unqualified but the CET expected a qualified certificate. This expectation could have arisen from discussions with either the company or the SAO.

Action

If the expectation arose from discussions with the SAO, the CET or Caseworker must ask why the certificate was not now so qualified. See the guidance at SAOG17800 if the matter is to be raised with the company.

The explanations and any further information provided may satisfy the CET or Caseworker that the main duty, see SAOG14000, was complied with throughout the financial year and the unqualified certificate was correct in which case there will be no inaccuracy penalty.

If the explanations do not satisfy the CET or Caseworker that the main duty had been complied with throughout the financial year and that a qualified certificate should have been provided, the CET must consider an SAO inaccuracy penalty, see SAOG18600, as well as an SAO main duty failure penalty, see SAOG18400.

Situation 3

The SAO provides a qualified certificate and the CET expected a qualified certificate.

Action

The CET or Caseworker should check that the items qualified in the certificate are the items they were expecting to see.

  • If they are, they should file the certificate away in preparation of the outcome of enquiries which may indicate that the certificate was inaccurate.
  • If they are not, either an absence of items the CET was expecting, or inclusion of items that the CET was not expecting suggests that something has changed since earlier discussions. The CET or Caseworker should reconsider whether they would have expected the excluded items to have been included on the certificate and deal with their consequences in line with situation 2 above, noting that correctly identified issues will not attract SAO certificate inaccuracy penalties, see SAOG18600. Those matters are not however precluded from the main duty penalty provisions, see SAOG18400.

NOTE: a qualified certificate will not necessarily mean that an SAO has failed in the main duty. A main duty failure could only be established through discussion and review, see SAOG17900.

Situation 4

The SAO provides a qualified certificate but the CET expected an unqualified certificate.

Action

The CET or Caseworker must

  • consider how the contents of the certificate might affect the overall risk status of the company/group and
  • discuss with the SAO, if the CET’s expectations arose from discussions with them, why the certificate is different than expected and
  • consider whether the matters raised on the certificate were correct. There may be issues which should not have been included that have been and issues which should have been included which have not been.

These inaccuracies must be considered for penalties in accordance with the situations above, although the inclusion of a non-relevant issue must not be considered as an inaccuracy unless it draws attention away from other failures or inaccuracies.

Any issues included on the certificate that the CET or Caseworker believes to be extraneous should be discussed with the SAO. This will assist the SAO in the preparation of future certificates and may also indicate that the certificate provided should have been unqualified.

NOTE: a qualified certificate will not necessarily mean that an SAO has failed in the main duty. A main duty failure could only be established through discussion and review, see SAOG17900.

Situation 5

The SAO provides a certificate stating that they are unable to determine whether there were appropriate arrangements in periods before liquidation or administration.

Action

This is expected to be the ‘normal’ statement by a liquidator in relation to a period before their appointment and must not automatically be treated as a risk. The CET should however consider whether this statement reflects the facts of the SAO’s position, see SAOG12400, SAOG15200 and SAOG15400.

  • If it does, the CET should accept that this aspect of the certificate is accurate.
  • If it does not, the CET must consider whether a careless or deliberate inaccuracy penalty, see SAOG18600, has been incurred.

Situation 6

The SAO of a group company that is not the VAT representative member for the group provides a qualified certificate in respect of its accounting arrangements for VAT liabilities.

Action

Any such qualification should have been provided in the certificate of the SAO of the group company that is the VAT representative member.

  • If the SAO for the representative member has provided a suitably qualified certificate, the CET need only advise the SAO for the other group company that in future they do not need to qualify their certificate in this respect.
  • If the SAO for the representative member has not qualified their certificate in this respect, the CET should consider whether that certificate contains a careless or deliberate inaccuracy, see SAOG18600, in that it omits mention of the VAT qualification.