HMRC has published the outcome of its consultation Raising standards in tax advice: protecting customers claiming tax repayments together with a summary of the responses it received.
Following the consultation, the UK government intends to:
introduce a new requirement for repayment agents to register with HMRC;
immediately introduce new transparency requirements for agents in the HMRC standard for agents;
legislate to render assignments of income tax repayments void: assignments of income tax repayments will therefore have no legal effect and the repayment will remain the property of the customer; while agents will still be able to receive repayments, the client will remain the legal owner;
explore introducing mandatory pre-contractual disclosure forms, and strengthening checks on repayment agents; and
undertake further work to strengthen evidence of client consent and to review the agent authorisation process.
The consultation focused on concerns around the use of tax repayment agents noting that, ‘while many repayment agents support customers to access reliefs or repayments they may not otherwise have been aware of, HMRC has frequently seen cases where repayment agents have pushed the boundaries of eligibility, exploited customers or made fraudulent claims’.
In related news, HMRC has revised its guidance on the standards it expects from tax agents and advisers. The changes mostly reflect the outcome of the tax repayment agent consultation, with the following sections having been expanded:
professional behaviour: both in terms of complying with the law and in all interactions with HMRC and clients;
transparency: making sure agents provide clients with all relevant material at all stages, including making clear that the agent does not act on behalf of HMRC, and setting out how any tax repayments will be paid to the client (clearly aimed at the repayment agent market);
accessibility: HMRC encourages agents to make sure their services are available and accessible to all customers; and
action HMRC can take when the standard is not followed: including the use of dishonest conduct notices, criminal investigation powers and referring the agent to the relevant professional body.
The CIOT has welcomed the announcement, but says that there are question marks over how it will be enforced, and notes that members of professional bodies will still be subject to stronger consumer protection requirements.
John Cullinane, the CIOT’s director of public policy, said this was ‘a significant, and broadly positive, step into the area of regulating tax agents from HMRC’.
‘These changes are unlikely to impact much on tax agents who are members of professional bodies such as CIOT, as they are already subject to professional conduct in relation to taxation (PCRT), a stronger set of professional and ethical standards,’ Cullinane noted. ‘However, they are a step forward in raising standards among those outside the PCRT bodies.’
‘One key question is around enforcement: what happens if an agent doesn’t live up to the standard?’ Cullinane asked. ‘It’s not clear that HMRC can “derecognise” agents other than in a tiny handful of cases, nor is there any range of intermediate measures corresponding to what professional bodies do to help members comply with professional rules and begin to sanction them if they don’t.’
HMRC has published the outcome of its consultation Raising standards in tax advice: protecting customers claiming tax repayments together with a summary of the responses it received.
Following the consultation, the UK government intends to:
introduce a new requirement for repayment agents to register with HMRC;
immediately introduce new transparency requirements for agents in the HMRC standard for agents;
legislate to render assignments of income tax repayments void: assignments of income tax repayments will therefore have no legal effect and the repayment will remain the property of the customer; while agents will still be able to receive repayments, the client will remain the legal owner;
explore introducing mandatory pre-contractual disclosure forms, and strengthening checks on repayment agents; and
undertake further work to strengthen evidence of client consent and to review the agent authorisation process.
The consultation focused on concerns around the use of tax repayment agents noting that, ‘while many repayment agents support customers to access reliefs or repayments they may not otherwise have been aware of, HMRC has frequently seen cases where repayment agents have pushed the boundaries of eligibility, exploited customers or made fraudulent claims’.
In related news, HMRC has revised its guidance on the standards it expects from tax agents and advisers. The changes mostly reflect the outcome of the tax repayment agent consultation, with the following sections having been expanded:
professional behaviour: both in terms of complying with the law and in all interactions with HMRC and clients;
transparency: making sure agents provide clients with all relevant material at all stages, including making clear that the agent does not act on behalf of HMRC, and setting out how any tax repayments will be paid to the client (clearly aimed at the repayment agent market);
accessibility: HMRC encourages agents to make sure their services are available and accessible to all customers; and
action HMRC can take when the standard is not followed: including the use of dishonest conduct notices, criminal investigation powers and referring the agent to the relevant professional body.
The CIOT has welcomed the announcement, but says that there are question marks over how it will be enforced, and notes that members of professional bodies will still be subject to stronger consumer protection requirements.
John Cullinane, the CIOT’s director of public policy, said this was ‘a significant, and broadly positive, step into the area of regulating tax agents from HMRC’.
‘These changes are unlikely to impact much on tax agents who are members of professional bodies such as CIOT, as they are already subject to professional conduct in relation to taxation (PCRT), a stronger set of professional and ethical standards,’ Cullinane noted. ‘However, they are a step forward in raising standards among those outside the PCRT bodies.’
‘One key question is around enforcement: what happens if an agent doesn’t live up to the standard?’ Cullinane asked. ‘It’s not clear that HMRC can “derecognise” agents other than in a tiny handful of cases, nor is there any range of intermediate measures corresponding to what professional bodies do to help members comply with professional rules and begin to sanction them if they don’t.’
