The new rules for Senior Accounting Officer (SAO) sign off on tax systems and processes came into force in late July 2009 and impact the current accounting period. As a consequence, now the usual hiatus around year end has died down, most companies caught by the new rules are starting to work out how best to deal with them. The good news is that many are managing to retain much of the work in-house, contrary to some initial concerns that this would prove an expensive set of rules to comply with.
Nevertheless, those companies that have already embarked on this are typically finding that the work involved is greater than first envisaged. This is partly because capturing the end to end processes for certain taxes is not necessarily straightforward and most companies operate a clear separation between the front end coding and accounting systems and the back office tax return preparation and review.
Additionally, we are finding that some companies are effectively using the new rules to address tax process issues they have been aware of for some time. For example, we are currently undertaking several projects to train company staff around PAYE and Customs Duty. For PAYE, training has been neglected in recent years and many of those people involved in the process have no formal tax training at all. Customs Duty on the other hand, appears to be an area that some organisations have paid little or no attention to historically, partly driven undoubtedly by the relative lack of HMRC audit activity.
In a similar vein, we have undertaken a number of pieces of work around updating tax manuals, internal guidance notes and travel and expenses policies. Whilst much of the mapping work and systems testing process is being undertaken in-house, most companies recognise the need to get some external support to evaluate both how robust existing systems are, where problems exist and what remedial actions would be appropriate.
It is still relatively early days for SAO rules but already a number of trends are emerging. It is certainly not the nightmare scenario that a few predicted 12 months ago when they were first announced. From the experience of those who have started working on them, it is still however a significant task and those who have yet to begin would be advised to do so sooner rather than later.