SAOG18500 - In what circumstances is a penalty chargeable: failure to provide a certificate

Where a Senior Accounting Officer (SAO) has failed to provide a certificate for a qualifying company for a financial year on time, see SAOG15700, they are liable to a penalty of £5,000.

A company’s SAO is ‘the director or officer who, in the company’s reasonable opinion, has overall responsibility for the company’s financial accounting arrangements’, see SAOG12100 and SAOG16500 or SAOG17500. If at the time of the failure or since the company has not notified HMRC of the name of its SAO, see SAOG18550.

The failure might be either

  • to provide a certificate at all, or
  • if a certificate is provided after the time limit, to provide a certificate within the allowed time.

Where there is more than one SAO for a financial year

Unlike the main duty penalty, a person who becomes the SAO for a company after the end of the financial year but before the filing date can be liable to a penalty for failing to provide a certificate for that financial year. For guidance on which person will be liable for a penalty for failure to provide a certificate, see SAOG18700.

Where a person is the SAO for a number of group companies

Where a person is the SAO for a number of group companies, they are responsible for providing a timely certificate for a financial year of each of those companies.

However, see the following situations.

Situation 1

The financial years of this company and the other group companies for which the particular person is the SAO all end on the same day,

and

we have already charged penalty on that person in respect of one of the other group companies for

  • failure to provide a certificate, or
  • inaccuracy in a certificate.

Can we charge a penalty for failure to provide a certificate?

We cannot charge a penalty for failure to provide a certificate on that person in respect of this company.

Situation 2

The financial years of this company and the other group companies for which the particular person is the SAO do not end on the same day,

and

we have already charged a penalty on that person in respect of one of the group companies whose financial year ends within this company’s financial year for

  • failure to provide a certificate or
  • inaccuracy in a certificate.

Can we charge a penalty for failure to provide a certificate?

We cannot charge a penalty for failure to provide a certificate on that person in respect of this company.

Situation 3

No penalty has been charged in the situations above for

  • failure to provide a certificate, or
  • inaccuracy in a certificate.

Can we charge a penalty for failure to provide a certificate?

We can charge a penalty for failure to provide a certificate on the person in respect of this company.

Example

The same person holds the SAO role for all the companies within a group. The companies’ financial year ends are

  • Company A - 30 June
  • Company B - 30 September
  • Company C - 31 December

We charge a penalty for failure to provide a timely certificate on the SAO in respect of company A’s financial year ended 30 June 2013. This financial year end date is within company B’s financial year ended 30 September 2013 and company C’s financial year ended 31 December 2013. We could not charge the SAO a similar penalty in relation to these two financial years even if the SAO had failed to provide a timely certificate in relation to those two companies in those two financial years.

However, if we had charged a penalty for failure to provide a timely certificate on the SAO in respect of company B’s financial year ended 30 September 2013 first, the situation would be different. In that case, when we came to consider the SAO’s failure in respect of company A, we could also charge the SAO with a penalty for failure to provide a timely certificate for company A for its financial year ended 30 June 2013. This is because, although we have already charged a similar penalty for company B, its financial year does not end within the relevant financial year of company A. However, we could not charge a penalty on the SAO in respect of company A for its following year, the year to 30 June 2014, if there was a similar failure.

To ensure that Customer Compliance Managers (CCMs) or the Mid-sized Business Customer Engagement Team (CET) keep track of the assessment of penalties for failure to provide a certificate in group situations, especially where there are differing financial year ends, and that they apply correct treatment of further failures that may arise, CCMs or the CET should maintain a record of ‘group’ failure to provide a certificate situations.

If CCMs, the CET or a Caseworker need advice in such cases they should contact their nominated business contact.

Reasonable excuse

Even where the circumstances for a penalty are met, there will not be a liability to a penalty if the SAO has a reasonable excuse, see SAOG20000, for the failure. Where the SAO does have a reasonable excuse, they must provide the certificate to HMRC without unreasonable delay after the reasonable excuse ceased to exist.

Other penalties for a financial year

A penalty for a failure to meet the main duty may be chargeable on an SAO for a company for a financial year in addition to a penalty for failing to provide a timely certificate. The CCM, CET or a Caseworker may become aware of these failures at different times and raise penalty assessments at different times.

If a certificate is provided late and subsequently found to contain a careless or deliberate inaccuracy, we cannot charge two penalties. The failure to be penalised is the failure to provide the certificate in the time allowed and there is only one penalty of £5,000.

FA09/SCH46/PARA5
FA09/SCH46/PARA8
FA09/SCH46/PARA9(3)