Working with Tax Agents

Following the publication of HMRC’s latest Working With Tax Agents consultation document, as part of the 2009 Pre-Budget Report,  Simon Norris, head of HMRC’s review of powers team, explains to Taxation Web what it means for agents.

Introduction

Taxpayers, tax agents and their professional bodies together with HM Revenue and Customs (HMRC) share a passionate interest in the accuracy of returns submitted on behalf of clients. For HMRC this means ensuring that where we, on rare occasions, discover fraud committed by a tax agent, we have access to the information we need to give us as accurate a picture as possible, of what has happened. 

Together with the professional bodies we must also engage with and help those who fail to take care, or who lack the necessary technical competence.

Aim of the Consultations

HMRC first consulted on this in April 2009. A summary of the views we received has been published on the HMRC website, together with a further consultation. This second round of consultation seeks views on:

• greater disclosure by HMRC to professional bodies in cases of poor technical performance or unprofessional conduct;
• HMRC’s role in policing the system; and
• dealing with the tax risk presented by High Volume Agents – those who make large numbers of claims that have little or no merit.

None of this is about penalising individual errors – we all make mistakes. No tax agent who behaves in accordance with appropriate professional standards would be affected personally by our proposals. And nor will any existing or new powers be used against tax agents who simply defend or advance their clients’ interests.

Also, it is not intended to make changes, through this consultation, to the law on tax avoidance, nor to the way HMRC addresses it.
 
The previous consultation confirmed broad agreement with HMRC’s view that it was not appropriate for HMRC to take on a role as a regulator.

We know from criminal prosecutions and other HMRC enquiry work that the tax loss from the deliberate behaviour of tax agents is at least £25m. This is clearly unacceptable and underlines the need for more effective powers - even if they are rarely required.

Access to Working Papers

Any action to consider a tax agent’s behaviour would require HMRC to demonstrate, to a judge or Tribunal, evidence of deliberate wrongdoing at a hearing at which the tax agent would be a party. 

Where it is found that the behaviour was deliberate it seems right to consider reviewing the working papers to see whether this wrongdoing went further. It would also be for the Tribunal to decide whether any wider access to working papers was appropriate.

Publishing the Names of Tax Agents

The consultation also asks whether the names of tax agents who have been found guilty of deliberate wrongdoing should be published. Names of such tax agents are already published by professional bodies under their own procedures. This would represent an extension to the powers contained in the Finance Act 2009 which enables the publication of the details of taxpayers who have been penalised for evading £25,000 or more, and which seeks to redress the balance between those evaders dealt with through the criminal courts and those whose cases are more appropriate for civil action.

Disclosure

HMRC raised the question of disclosure to representative bodies in the first consultation. The current document discusses how disclosure of persistent errors, or a lack of care or technical competence would enable a body to offer help and assistance to a member. Whenever such an issue arose, however, HMRC would first seek to discuss the matter with the tax agent to try and address matters.  

Unaffiliated Tax Agents

HMRC does not differentiate between tax agents affiliated to a professional body and those who are not. The consultation does not anticipate any change to this approach. Membership of professional bodies does however give HMRC reassurance that robust professional standards will be enforced and monitored. 

More Details

You can find the full consultation at Current HMRC Consultations. We hope that TaxationWeb’s readers will engage with the consultation.

Article Added Saturday, 19 December 2009

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