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As HMRC propose new powers to tackle perceived ‘deliberate wrongdoing’ by tax agents, LITRG again urges consideration of the wider issues of working with various kinds of intermediary. 

The ‘tax agent’

LITRG often refers to ‘unrepresented taxpayers’ and those on low incomes.  In using these terms, we generally mean those who cannot afford to pay for professional advice to help them in their dealings with HMRC.  So what do they do if they need help?

• Some might contact HMRC direct, with varying degrees of success (see, for example, our recent coverage of the problems in contacting HMRC by telephone).

• Friends and family might be enlisted, in some cases via a legal arrangement such as a ‘power of attorney’ depending on the degree to which an individual is capable of dealing with their own affairs.

• Others might approach a third sector organisation, for example the tax charities TaxAid and TaxHelp for Older People or a broader advice agency such as Citizens Advice.

• A fourth category might contact a tax adviser who is prepared to help out on a ‘pro bono’ basis.

• Or they may engage what HMRC term ‘high volume agents’ (HVAs) – organisations which focus on obtaining tax repayments, sometimes working on commission based upon the amount of the refund secured.  There is a range of these agents, from what we might term the ‘genuine’ through to those who commit large scale fraud. 

In our response to HMRC’s first consultation on ‘working with tax agents’ last summer, we highlighted the need for them to consider all of these different types of intermediary in any proposals they put forward. 

‘Ding, ding – round two’

HMRC’s Working with tax agents: the next stage consultation develops ideas for tackling ‘deliberate wrongdoing’ by tax agents. 

Some key points from our response are:

• HMRC say taxpayers have free choice of an agent and should ‘face the consequences’ of a poor selection.  But we argue that HMRC should help taxpayers who may be lured by the promise of a tax repayment on which the services of so-called ‘high volume agents’ (HVAs) are frequently sold. 

• Where HMRC seek powers to tackle HVAs, taxpayers’ interests should be protected by allowing them the means to revise their claim. 

• In partnership with interested third parties, HMRC should review how they work with intermediaries of all kinds, examining the agent authorisation process and how they could recognise an informal representative for tax in the same way that they do for tax credits. 

In summary, we still feel that HMRC are pushing through new powers to tackle a perceived (yet unquantified) problem instead of considering practical solutions which could aid the smooth-running of the tax system for all – taxpayers, agents/intermediaries and HMRC alike. 

Useful links

LITRG’s full response to the consultation can be found on the group’s website.