A fortnight after the CIOT’s new President, Anthony Thomas, called for a return to ‘healthy tension’ between HMRC and the professional bodies, his wish appeared to have been granted with the publication of HMRC’s consultation, ‘Establishing the future relationship between the tax agent community and HMRC’.
The consultation sets out proposals and options for implementing a strategy for engaging with tax agents. HMRC do not seek to regulate the profession but say that there could be ‘value’ in all tax agent firms being expected to meet a ‘minimum level of competence’. Agents’ representatives were quick to warn that any system of enrolment of tax agents must be overseen by an independent body.
‘Not good enough’
Thomas had told CIOT members that HMRC had been in a state of constant change in recent years, and the result had been ‘disastrous in many respects’. HMRC have set out the changes that have been made ‘to improve services’ but accept that some agents have been disappointed that local relationships ‘no longer exist’, and that some believe the changes have been accompanied by ‘poorer levels of service generally’.
At some periods and in some areas, HMRC admit, ‘performance has not been good enough’. They will continue to seek improvements in services and the quality of ‘staff performance’. However, the focus of this consultation is the relationship between HMRC, tax agents and clients. Improving the quality of service for all parties will make compliance easier, they say.
The ‘agent strategy’ is not intended as a substitute for improving service standards, HMRC told Tax Journal. John Andrews, Chairman of the CIOT’s Low Incomes Tax Reform Group, had said the proposed strategy was ‘not an alternative to dealing with poor service levels at HMRC call centres and delays in responding to correspondence’.
An HMRC spokesman said: ‘Giving agents the ability to control certain transactions directly through enrolment and self service will in practice mean an improved customer experience. We will also continue our drive to improve our performance generally. We get many things right but we are committed to build on this by improving key services such as access to contact centres and post turnaround times.’
Cost savings
Whatever the outcome of this consultation, one thing is certain. A lot of people are going to spend a lot of time talking about it. The CIOT presented a webinar within days of the announcement, and it has put 38 questions to members in an online survey.
Attempts to change the existing relationship between HMRC and tax agents will inevitably raise concerns, said Paul Aplin, Chairman of the ICAEW Tax Faculty’s technical committee. But there are potential cost savings for agents and clients as well as HMRC in ‘self serve’, he writes in this week's issue of Tax Journal.
Derek Allen, Director of Tax at ICAS, said: ‘It’s a substantial cultural change that’s being offered. This is an opportunity to produce significant improvements by cutting HMRC errors, reducing tax compliance costs and improving the quality of information held by HMRC.’
Worrying undertonesElizabeth Wilson, Senior Solicitor, Macfarlanes LLP
The concept of ‘understanding the total engagement of individual agents’ has worrying undertones. Will agents with ‘good’ records of compliance not be deterred from taking on more tricky clients (which is likely to assist in the collection of tax from those clients) if accepting those clients might affect an agent's good standing record with HMRC?
Many professional tax advisers do not hold a ‘recognised accountancy or tax based qualification’. Is the suggestion really that practitioners take such examinations even when they have been advising on tax for decades? HMRC say they do not propose to seek regulation of tax agents … but that HMRC might be allowed to refuse to deal with an agent who it considers has acted dishonestly or has abused HMRC's systems.
Given that professional reputations and livelihoods are at stake, before HMRC can refuse to deal with an agent and notify clients of that agent accordingly, HMRC’s decision to do this and their reasons should be notified to the agent in confidence first, together with an opportunity for that agent to appeal to an independent arbiter. Only after an appeal process has been exhausted should notice be given to clients of the agent concerned.
Far reaching proposalsGeorge Bull, Senior Tax Partner, Baker Tilly
The consultation document sets out some interesting and far sighted proposals. ‘Self-serve’ will enable registered agents access to some of HMRC systems online. Security is, unsurprisingly, an important factor and the proposals include a system of enrolment or registration of professional tax agents together with a system of monitoring their performance.
Under self-assessment HMRC’s role, broadly, is clerical. In the main the data supplied by the taxpayer is further processed so as to be suitable for whatever then needs to be done …However, major failures by HMRC in correctly dealing with the information (such as the issue of numerous incorrect tax coding notices) appear to have led to the wish to out-source even more of the processing to tax agents.
The removal of the need for clerical processing by HMRC should provide some clear benefits for both HMRC and taxpayers … However, a robust system will be essential to protect against fraud or abuse.
