The firm found the number of fines under HMRC’s senior accounting officer regime rose by 9% to 125 in 2017/18 from 115 in 2016/17, with those in the retail sector seeing the largest number of such penalties.
In 2012/13 HMRC only fined 46 finance executives. The rise indicates that the Revenue has increased its focus on making senior individuals personally liable for errors and failings by their businesses, Pinsent Masons said.
Moreover, it can also be driven by HMRC’s increased focus on employment tax compliance. The firm said the Tax Tribunal has criticised the tax authority for its “heavy-handed approach” to imposing these fines.
Pinsent Masons' partner Jason Collins said, “HMRC is showing no sign of letting up on CFOs. Finance directors need to be aware that they are personally in the tax authority’s sights if their businesses make errors in accounting.
“That can be particularly galling if they had no personal knowledge of the errors – HMRC will simply say that it was their responsibility to know.
“Given how complex the tax affairs of £200m+ turnover business can be, a CFO cannot reasonably be expected to have personal oversight of every detail. That’s why putting in place policies, procedures and monitoring for tax compliance is absolutely critical," Collins added.
An HMRC spokesperson said, “SAO penalties help ensure tax is on the boardroom agenda and promote responsible management of tax. We want to make sure tax compliance is given proper attention by a senior officer of the company.
“HMRC does not view the SAO regime as a revenue-raising measure – the intention of the policy is to ensure that tax compliance is given adequate attention by a senior officer of the company.
“Penalties are deterrent to qualifying companies and SAOs failing to comply with the annual requirements of the SAO provisions.”