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Penalties for breaches of SAO rules ― introduction

There are a number of penalties chargeable for failures in relation to the SAO regulations. In addition, SAO failures should be considered in the context of the wider penalty framework as well as in terms of the impact that SAO failures may have on a company’s risk rating with HMRC.

For example, if a company has failed to establish and maintain appropriate tax accounting arrangements, it will be difficult to demonstrate that it took reasonable care in relation to an error. See the Reasonable care ― inaccuracies in returns guidance note.

Similarly, if a company does not have appropriate tax accounting arrangements in place it is likely to impact on the company’s risk rating. See the Business risk review guidance note.

SAO penalties

The SAO provisions introduce three potential penalty positions, with one chargeable on the company and the other two assessable on the SAO personally. The three potential penalties are assessable as follows:

1. •

   a penalty of £5,000 assessable on the SAO for failure