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New Relationship Between HMRC and Tax Agents: Is HMRC Giving Up?

TaxationWeb considers HM Revenue & Customs' commitment to quality of service.

Well, yet another interesting week here at TW Towers: there have been a couple of announcements by HM Revenue & Customs (HMRC) about proposals to restrict the availability of Capital Allowances on property, ( Capital Allowance Tax Reliefs on Property - Problems Ahead for Property Owners? ) and ‘green energy technology’ - HMRC Plans to Cut Tax Reliefs for Renewable Energy Investments - and I am not sure which I find more troubling.

But the big news this week was "Establishing the Future Relationship between the Tax Agent Community and HMRC”. This lengthy consultation document proposes that authorised agents be granted direct access to HMRC’s own systems – in other words, be able to bypass telephone calls / letters to HMRC and just ‘do it yourself’.

Having spent the last couple of days telephoning both VAT and Corporation Tax offices countless times trying to get through, I am in the mood to concur that this looks like a marvellous idea.

But there is more to it than that.

HMRC is concerned about whom it may be ‘letting in’ to use its systems so freely. The consultation considers differentiating between qualified and unqualified tax advisers. It also ponders the future regulation of the tax agent profession – and comments on ‘recent developments’ in cases where it has refused to deal with an agent. (Many of us are aware of some ‘recent developments’ – aka the “CLAC” case – which have left HMRC looking more than a little bit wrong-footed, and damaging to both HMRC and the agent).

HMRC has stated that it believes that tax agents should regulate themselves, whilst recognising that it will be able to monitor authorised agents using its systems as above.

I was reminded of a comment made in a recent seminar by a tax adviser who deals with HMRC’s policy-makers: “Basically, they want us to do their work for them, so they can take on a policing role.” The adviser in question is a self-professed cynic, after many years’ experience of dealing with HMRC at the sharp end of enquiries and investigations. I am an optimist, which is why I invest so much time ‘Working Together’ with HMRC.

But his comments did give me pause for thought, and cause for concern:

Is HMRC Giving Up on Service?

Well, HMRC certainly won’t see it like that, but on page 16 of the report there is a qualified admission that for some agents there is “dissatisfaction with the quality of service”; one could argue that, rather than address the problem directly, HMRC is just passing it off onto someone else – the agent. That actually means more costs for the agent. It can only be seen as potentially saving time and costs if compared to the “dissatisfying” service levels currently experienced, and factoring in the time wasted on failed telephone calls / correspondence.

If the telephone were currently answered first time every time by an officer with the required expertise, authority and access to systems, then agents would have no appetite for change. And there can only be a few areas where HMRC can foist these issues onto others, before it’s back to having to 'have a quiet word with itself’. ("I'll have some Tax Credits for main course with your new PAYE 2 software system for dessert, please. And a wafer-thin mint.")

What Does This Mean for Everybody Else?

We’re deliberately inclusive here at TW. We try our best to engage taxpayers, agents and even HMRC. I think that the ‘Working Together’ initiative is of real benefit to taxpayers generally, and not just to those with agents – because for now, agents basically use the same routes to engage HMRC as everyone else, so we report back on issues that affect everyone, not just clients. What happens if authorised agents use completely different systems? John Andrews, Chairman of our good friends at the Low Incomes Tax Reform Group, also has concerns about unrepresented taxpayers along similar lines – see his comments at HMRC's Agent Strategy - Don't Forget the Unrepresented.

There’s also a theme in the consultation wherein HMRC apparently sees itself as an ‘educator’ of agents; I think we’ll leave that for another day, when I've calmed down.

And don’t think I’ve forgotten about those consultations on Capital Allowances, either.

Regards,

TW Ed