Tax practitioners think that HM Revenue and Customs’ (HMRC’s) response to the Tax Agent Strategy consultation, published today, shows that they are starting to move in the right direction in a number of important areas, although some key issues such as independent oversight and security are still to be resolved.
Chartered Institute of Taxation (CIOT) President Anthony Thomas said:
“The HMRC response shows a recognition of, and movement on, a number of key issues since the consultation was launched in May. This is in response to the concerns of the CIOT and tax professionals generally, and demonstrates the importance of the CIOT and other bodies engaging with HMRC on these issues, which are a concern to our members.
“Firstly, HMRC have decoupled their proposal for a self-serve facility for agents, which has broad support within the profession, from the more controversial proposal for an ‘agent view’. This is sensible. It means that some initial pilot work between HMRC and agents can start as soon as next spring to identify how best self-serve can work. At the same time, further consultation can take place on agent engagement and standards, recognising the extensive concerns of the tax profession over HMRC’s plans to target agents in particular ways to improve their clients’ compliance.
“Secondly, HMRC appear to be taking seriously the need for independent oversight. This is absolutely critical given the impact of sanctions against tax agents. Back in May, I said that a ‘red line’ for the CIOT was that any system of enrolment and dis-enrolment of tax agents must be overseen by an independent body. HMRC now acknowledge that there ‘appears to be a case for independent input to the decision-making process’ and promise further consultation. This is not the guarantee of independent oversight that we are looking for - and which we regard as essential - but it is welcome progress. There is no doubt that the red line is still there for me and I will not let this aspect slip from the HMRC radar.”
Association of Taxation Technicians Deputy President Stuart McKinnon noted concerns still exist around security, although he welcomed what he called “HMRC’s more realistic approach on timescales and budgets”:
“There is a still a lot of work needed on these proposals. There are a number of areas, such as the security of HMRC’s systems, where we continue to have concerns, which the consultation response does not adequately address. Firms need HMRC’s security to tie in with the way they work, not just replicate industry standards.
“The second round of consultation proposed for next year is acknowledgement of our view that it is more important to do this right than it is to do it quickly. HMRC have a lot of work to do to persuade tax professionals to support the ‘agent view’ plan. They are right to allow themselves time to do this. To press ahead prematurely would further damage trust between HMRC and the profession.
“Overall, this consultation response does show that HMRC are starting to listen to the concerns of the profession. But there is still a long way to go.”
Notes to Editors
- The Government’s consultation paper, ‘Establishing the future relationship between the tax agent community and HM Revenue & Customs’, was published in May 2011 and set out proposals for the future relationship between the tax agent community and HMRC. These included a system of enrolment of professional tax agents, with enrolled agents being granted access to a ‘self-serve’ facility. This would enable enrolled agents direct access to some HMRC systems online. This could include agent self-authorisation, seeing the full range of their clients’ payments and liabilities, and amending clients’ coding notices.
- In response to the consultation, the CIOT and ATT made a joint submission to HMRC, drawing on input from approaching 2,000 members. The key areas which the CIOT and the ATT highlighted were:
a) An independent board, such as the existing independent Taxation Disciplinary Board, to consider suspension and disenrolment of agents, and also the parameters for suspension, disenrolment and enrolment - essential to building trust between HMRC and tax agents;
b) How the whole process will apply to larger firms - the document seems mainly written with small firms and sole practitioners in mind;
c) The implementation of the ‘agent view’ to assess the risk which each agent represents to HMRC - if based on a simple checklist and/or poorly implemented it would damage trust;
d) Whether those with enhanced access to HMRC systems should be qualified tax advisers – there was huge support for the view that the unrepresented should have sight of the same information as the represented, balanced by a view that only those who have reached a certain tax standard should gain full access to HMRC systems. This is not about protectionism by professional bodies - it is about concern for the integrity of the tax system. We will write separately on a 'proxy for good';
e) Decisions should not be made before the consultation has run its course and further discussions taken place – the impression gained by many is that the decision to proceed has already been taken;
f) Agent authorisation – clearly HMRC will need excellent security systems so as to guard against abuse by criminals aiming to milk the tax system. These systems must not impose onerous burdens on legitimate agents who share common cause with HMRC against fraud but often feel that they are not trusted by HMRC because of the way the systems work;
g) Security of HMRC’s systems must not solely rely on agents’ security and must address client confidentiality concerns;
h) Sight must not be lost of the key HMRC service issues which are increasingly onerous and time consuming for agents; and
i) An appreciation that the tax system needs improving and that the Government has set a tough spending review, yet agents and their clients may struggle to take on further cost displacement.