If a member is signing a tax return on behalf of a client, they should carefully consider:

• Their legal authority to do so (for example, is a power of attorney required?);
• The process whereby the client will review and take responsibility for the contents of the return; and
• Any legal implications of signing the return for both the practice and the individual signatory.

One specific scenario in which these principles may be relevant is where a member is appointed as tax agent or tax representative for VAT purposes. Such appointments are principally relevant where the client is a ‘non established taxable person’ (NETP). Where a member is appointed as an agent, the client remains legally responsible for registering for VAT, submitting returns and paying VAT on time. Any arrangement made with an agent to look after a client’s VAT affairs will be subject to the particular contractual agreement between the parties.

Appointment as tax representative for VAT for a NETP means that the member becomes jointly and severally liable for their client’s VAT debts. The responsibilities of a VAT representative are specified in Section 48 of the VAT Act 1994 and a member should consider carefully whether they are prepared to take on such responsibilities. As an alternative, the member should consider whether appointment simply as a tax agent for VAT is preferable, as this does not make them jointly and severally liable for their client’s VAT debts.

If the member does decide to accept an appointment as tax representative for VAT purposes, they should consider ways of protecting their practice from the implications of joint and several liability. The risk can be mitigated, for example, by obtaining bank guarantees from the client. The member should also be aware of the possibility that their objectivity could be threatened due to the self-interest arising from their role as the client’s VAT representative.