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Robin Williamson explains how the Low Incomes Tax Reform Group responded to HMRC’s ‘Working with tax agents’ consultation.

Background

For some years now, HMRC have been reviewing working methods and considering how the tax system can be run better. A recent consultation sought to review how HMRC manage their relationship with ‘tax agents’. 

Whilst welcoming the principles behind the consultation, LITRG’s response calls for HMRC to better support volunteer advisers and to recognise the many types of agent and representative who help others, both formally or informally.

First, what do HMRC mean by the term ‘tax agent’? Being clear on this point is fundamental to the consultation process and any outcome from it, as ‘agents’ in their broadest sense can cover a wide variety of relationships.

In tax terms, an ‘agent’ or ‘intermediary’ could be:

• A formally-appointed tax adviser, paid for their work;
• A formally-appointed tax adviser, working on a pro bono basis, for instance a volunteer for organisations such as TaxAid or TaxHelp for Older People (TOP);
• A volunteer for one of those organisations but on a more ‘ad hoc’ basis, without a formal instruction to act as a taxpayer/HMRC go-between;
• An adviser for a broader advice agency, such as Citizens Advice;
• Someone acting as an appointee or legally-appointed Attorney for another individual;
• A carer, friend or family member trying to lend a helping hand to someone who is having difficulty resolving a tax matter. 

And indeed, there are probably other shades of grey in between. 

In our response to the consultation we make the following key points:

1. The bodies under whose auspices most volunteer agents or appointees act (such as TOP, TaxAid or Citizens Advice) use systems to manage risk, and know when and how to intervene. The risk to HMRC is small and residual.
2. Where professional tax agents act pro bono for no fee, and not in the course of a profit-making business activity, we recommend that they be excluded from any registration scheme, or similar system of control, that might result from this consultation.
3. As for those non-professionals who assist family and friends, or carers helping vulnerable taxpayers, help and support before the fact is more effective in countering any risk than compliance activity afterwards. If people risk a penalty for trying to help but get it wrong, this could deter them from giving their time to help their family or community. HMRC should extend their recognition of ‘agents’ to include such informal representatives, whose involvement can be of great benefit to HMRC if they are properly supported.
4. We would like to see further consideration of the definitions of ‘tax’ and ‘agents’, making these terms absolutely clear before moving on to any further consultation.

Useful links

You can read the original consultation document on HMRC’s website.

The full LITRG response can be found on the LITRG website.

If you need help and advice on tax matters, you could try contacting:
TaxAid
TaxHelp for Older People

For more general advice, including help with tax credits and welfare benefits, contact your local Citizens Advice Bureau.