U.K. 'Sarbanes-Oxley' holds senior accounting officers responsible.

• Author: Heffes, Ellen M.
• Position: COMPLIANCE

Legislation enacted in July in the United Kingdom is creating new compliance chores for larger corporate taxpayers. Schedule 46, Clause 92 of the Finance Act of 2009 requires senior accounting officers of large corporations to "take reasonable steps to establish and monitor accounting systems within their companies that are adequate for the purposes of accurate tax reporting."

Such adequacy must be verified and certified annually; failure to comply will result in personal penalties levied on the senior accounting officers.

This new legislation initially applies to approximately 2,000 large U.K. taxpayers and covers value-added tax, income tax, customs and excise duties as well as several other tax types.

Similar to Section 404 of The Sarbanes Oxley Act of 2002, the Finance Act creates compliance burdens for larger corporations that are expected to extend to smaller taxpayers should the regulations prove successful. Corporate finance and tax directors are understandably concerned.

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The majority of enterprises view tax reporting and compliance as complex, time-consuming and costly processes that have little strategic value to the business. While U.S. companies already face myriad regulatory and risk-management issues surrounding Sarbanes-Oxley, most European organizations have--thus far--operated relatively unscathed by mandated sign-off on the accuracy of their tax controls. This era ends with these regulations focusing on senior management taking personal responsibility for the effectiveness of controls governing corporate...