SAOG21302 - Assessing a penalty: penalty involving time limits - Example 3
Peter is a Customer Compliance Manager (CCM) who suspects that two groups of private limited companies are ultimately owned by the same foreign body corporate and are therefore in fact a single group for SAO legislation purposes. He puts this to the relevant persons in both groups in January 2020 and on 16 March 2020 they confirm that this is the case.
The combination of these groups means that all the UK companies are qualifying companies. In fact, they have been qualifying companies for the years ended 30 June 2010 through to 30 June 2018. None of the companies has notified HMRC of its SAO for each year and consequently no SAO certificate has been provided either. They are also qualifying companies for the year ended 30 June 2019 but because they are private limited companies they still have until 31 March 2020 (15 days) for the companies to notify SAO details and for the SAOs to provide certificates.
Potentially the penalty position is:
- One UK incorporated company will be liable to a £5,000 penalty for each year for failing to notify HMRC of the name of its SAO. This is not necessarily the same company each year. See SAOG18300.
- Each different SAO who is liable to a certificate penalty, as determined in accordance with SAOG18700, for the UK incorporated companies in the group will be liable to a £5,000 penalty for each year for failing to provide a certificate or certificates, see SAOG18500.
Peter draws the SAO implications of this group confirmation to the attention of the companies involved. The companies in each former group, and the SAOs of the companies, all claim they have a reasonable excuse as they were unaware of the existence of the ‘other’ group. Peter enquires into this further.
Table 1 shows the different outcomes that are possible for the company depending on the result of his enquiries.
Table 1 - the company
| Company action | Peter’s enquiries show that each group was aware of the existence of the other and their common ownership | Peter’s enquiries do not reveal any evidence that the two groups were aware of each other |
|---|---|---|
| A company notifies HMRC of the name of its SAO by, say, 16 April 2020 | There was never a reasonable excuse for the failure. A penalty is due. | Peter is satisfied that there was a reasonable excuse and that the failure to provide SAO details was remedied without unreasonable delay. Liability to a penalty does not arise. |
| A company does not notify HMRC of the name of its SAO by, say, 16 April 2020 | There was never a reasonable excuse for the failure. A penalty is due. | Peter is satisfied that a reasonable excuse had existed but had lapsed before the company made the notification of the SAO. A penalty is due. |
Note: The date at which a reasonable excuse lapses will depend on the facts of each case. The timescale used in this example is for illustrative purposes only.
If penalties are due, the years ended 30 June 2010 to 30 June 2013 will be out of date at 16 April 2020. Peter will have until 16 September 2020 (6 months after the failure came to his attention on 16 March 2020) to raise penalty assessments for years ended 30 June 2014 to 30 June 2018.
Table 2 shows the different outcomes that are possible for the SAO depending on the result of Peter’s enquiries.
Table 2 - the SAO
| SAO action | Peter’s enquiries show that each group was aware of the existence of the other and their common ownership | Peter’s enquiries do not reveal any evidence that the two groups were aware of each other |
|---|---|---|
| The SAO was aware that the company had decided not to notify their details and did not provide a certificate. | There is no reasonable excuse. A penalty is due. (Penalties could also arise for failure to carry out the main duty.) | Not applicable. |
| The SAO became aware that the company had nominated them on, say, 16 April 2020 and they submit their certificate by 16 May 2020. | Despite the company knowing that it was a qualifying company it had not shared this with the person who was its SAO. On becoming aware of his responsibility, the SAO put matters right by providing a certificate without unreasonable delay. He had a reasonable excuse and so no penalty is due. | Peter is satisfied that there was a reasonable excuse and this continued until the SAO provided the certificate. Liability to a penalty for failure to provide a certificate does not arise. |
| The SAO became aware that the company had nominated them on, say, 16 April 2020 and they submit their certificate after 16 May 2020. | Despite having a reasonable excuse as above the SAO did not submit a certificate without unreasonable delay after the excuse had ended. Therefore the SAO does not have a reasonable excuse and a penalty will be due. | Once the SAO became aware of their responsibilities, they failed to address them without unreasonable delay. A penalty for failure to provide a certificate is due. |
Note: A penalty could still arise for failure to carry out the main duty, although as the SAO would not have been aware that they were in the SAO role they would be likely to claim that they had a reasonable excuse. A penalty could also still arise for providing a certificate containing a careless or deliberate inaccuracy.
Note: The date at which a reasonable excuse lapses will depend on the facts of each case. The timescale used in this example is for illustrative purposes only.
If penalties are due, the years ended 30 June 2010 to 30 June 30 June 2013 will be out of date at 16 April 2020. Peter will have until 16 September 2020 (6 months after the failure came to his attention on 16 March 2020) to raise penalty assessments for years ended 30 June 2014 to 30 June 2018.
Mid-sized businesses do not have a CCM. For the definition of a Mid-sized business, see SAOG05010. For Mid-sized businesses, the Mid-Sized Business Customer Engagement Team (CET) or a Caseworker would assess the penalty in the above example.
FA09/SCH46/PARA9 (2)(a)
FA09/SCH46/PARA9 (2)(b)