Will your firm pass HMRC’s new test?

It’s the first week of 2014 and the countdown has already started to one of the most important dates in the history of the Revenue, and anything that affects HMRC must, by default, be of interest to accountants, says Jennifer Adams.

For 2017 is the date that HMRC’s ‘Aspire’ contract ends and by that date all HMRC’s new IT systems must be in place – tested, working and secure.

We are already painfully aware that the government has been rethinking its approach to IT across all government departments, not only at HMRC. HMRC is required to fully digitise the many different taxation systems in the hope that this will reduce the number of paper filings and phone calls made to HMRC and thus eventually save some £50m annually in administrative costs. This article considers how far that new process has...

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  • New man in control: Mark Dearnley
  • The SIAM model
  • HMRC’s current IT workload
  • HMRC’s four ‘examplar’ projects
  • Digital self assessment
  • Business Tax dashboard
  • PAYE Online 
  • Agent online self serve

Continued...

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Comments

Only one problem    6 thanks

Ken Howard | | Permalink

There's only one item of concern on that list.  That's the VAT registration of the agent.  I thought that HMRC had got over themselves on this as it was widely held up as a major flaw a few years ago when only VAT registered agents could use HMRC's online VAT service, but HMRC eventually caved in and allowed non VAT reg agents to use it too!  Presumably, the group at HMRC introducing the new system aren't the same people who did VAT online - otherwise they'd realise their mistake in dragging up old ground again which they WILL have to retreat on.

carnmores's picture

agreed bloody typical isnt it

carnmores | | Permalink

and what about agents abroad or are they totally verboten or will they need a local sales tax number?

BKD's picture

The wedge

BKD | | Permalink

Wise_Owl wrote:

Isn't the "trusted" status for agents just another way of HMRC eventually effectively "licencing" accountants and being able to control who can and cannot act for clients?

In my view - no.

carnmores's picture

@BKD

carnmores | | Permalink

why not? what other plausible explanation can you advance?

Glennzy's picture

If you not accepted

Glennzy | | Permalink

surely it just means it will be a bit harder to do your job as you will not have the ability to sort out problems like reallocating POA etc. It does seem ridiculous if you are a registered agent now, that you "wont pass the test" just because you are not large enough to warrant VAT registration, when the big boys who sell tax avoidance schemes and help the likes of Jimmy Carr avoid £millions will be welcomed with open arms. When do you have to register for this UAR?

Brave new world

mikefleming3028 | | Permalink

 

So much for working together, looks like an attempt at Operant conditioning to me!!

As for the Aspire Contract and savings of £50M per year this is buttons in comparison to the just short of £1billion per annum they have and are continuing to pay Cap Gemini/Aspire for their services. ( see the PAC recent report on the subject)

HMRC`s IT strategy has been and remains an expensive disaster and I will be surprised if the new man Mark Dearnley will stick around any longer than his predecessors when he discovers what a poisoned chalice he has been handed.   If you think I am being Dystopian look at the employment history of the job and the short "life" span of the position. Watch this space      

Time for change's picture

In all my dealings with HMRC these days

Time for change | | Permalink

I take the refrain of Doris Day every time - "Que Sera Sera".

The agent online self serve criteria, as it appears to stand at the moment, is extremely dangerous territory for HMRC, if they persist with the inclusion of discriminatory type exclusions.

Whether a firm, or an individual, is registered for value added tax, matters not a jot.

As Ken Howard quite rightly comments HMRC WILL have to retreat on that one, otherwise the potential for legal action will be extremely high. HMRC must learn that they should work with the agent community, not against them.

I don't fall for this bosom buddy style of presentation when I attend the HMRC roadshows.

There is also the danger in total reliance on digital technology where there is no backup, in the event of complete breakdown. Life throws many spanners in the works and, the potential damage from a terrorist threat, to the Internet, would be unthinkable.

johnjenkins's picture

Unfortunately

johnjenkins | | Permalink

this is a far cry from the first meetings we had with HMRC. We actually felt we were getting somewhere. Then of course, like all good ideas HMRC come up with, it all goes down the pan.

In the words of Clint Eastwood "It's all window dressing"

As I see it (let's just look at individual agents) you're either registered with a body or with Customs and Excise. So why can't these be automatically be put through. HMRC will know if any of them are "naughty" so a watchful eye could be kept.

I don't think Agent whatever will ever happen. HMRC will put too many obstacles in the way cos they don't really want us to have access. A classic example is refunds for individuals. You can go into their account find the refund, ask for a refund, but you can only send it to clients bank account, even though tax return shows "send to agent". What's the story "fraud" - bungkum.

Even more changes

Shawki | | Permalink

After reading this and all the comments,it seems every agent needs to register before March 2015, and the feeling I seem to be getting from what I have read on the HMRC site is agents are going to be doing even more work for the Revenue, and every agent would need to make sure that everyone of their clients are 100% safe, or the agent could lose their UAR... and I can't see how the revenue can enforce every agent to have a practicing certificate... as I'm sure we have all come across the so called Chartered Accountant year ends and have found them to be a mile away from being correct, and that does include the big firms.... over the 27 years I have been in practice, I have seen so many mistakes on accounts that have been produced and submitted into the Revenue by the so called big firms.. are we next going to see small agents taking the Revenue to court on a human rights issue.... That will give the revenue even more reason to waste even more money..

imagine the black    1 thanks

justsotax | | Permalink

market of 'accountants'...if official agents can only act for the 100% clean.....

johnjenkins's picture

If HMRC

johnjenkins | | Permalink

need a new system of registering agents cos they can't be bothered (sorry no staff) to go through who is already registered how the hell would they be able to tie up agents with 99% squeaky clean clients. It's a non starter, always has been and just another excuse for prolonging what would have been (in its original format) a fantastic step forward and up and running. Perhaps HMRC staff don't want to lose their jobs so quickly.

Wild Billy's picture

Show me your proof

Wild Billy | | Permalink

johnjenkins wrote:

I don't think Agent whatever will ever happen. HMRC will put too many obstacles in the way cos they don't really want us to have access. A classic example is refunds for individuals. You can go into their account find the refund, ask for a refund, but you can only send it to clients bank account, even though tax return shows "send to agent". What's the story "fraud" - bungkum.

What evidence do you have that fraud ISN'T a problem? Are you saying that if HMRC just opened up its systems to everyone that rogue agents and downright criminals wouldn't at least ATTEMPT to exploit that?! Really?! It's not like we haven't seen evidence of mass criminal attacks on HMRC's systems in the last 10 years...

I want HMRC to have safeguards in place and demand high standards from Agents. It might drive standards up and weed out the agents who create problems for the rest of us- ever taken on a client from someone who very obviously didn't know what they were doing? Yes, I thought so. And plenty of those have belonged to a professional body over the years.

And that list looks fine to me as a set of criteria that is being CONSIDERED. I do tend to agree that VAT registration seems a little odd though and I wouldn't support that, although I'd want to understand what the rationale was for including before rushing onto a forum to denounce the proposals as nonsense or window dressing. Otherwise, I'd seem a bit silly.

I'd love to be told their reasoning for VAT registration!

Ken Howard | | Permalink

Wild Billy wrote:
I do tend to agree that VAT registration seems a little odd though and I wouldn't support that, although I'd want to understand what the rationale was for including before rushing onto a forum to denounce the proposals as nonsense or window dressing. Otherwise, I'd seem a bit silly.

Probably the same rationale they claimed to have when they brought in online VAT returns only available to VAT registered agents a few years ago.  Upon being challenged to explain their requirement for VAT registration, they suddenly decided that they didn't need that check after all, and changed their systems to allow for non VAT registered agents, without ever either admitting they had no reasoning, or saying what their alleged reasoning was.  Some mandarin has probably just dusted off an old draft check list and started to use it as a skeleton for the new systems without applying any thought or common sense!

'agent' == the bank

The Limey | | Permalink

johnjenkins wrote:

I don't think Agent whatever will ever happen. HMRC will put too many obstacles in the way cos they don't really want us to have access. A classic example is refunds for individuals. You can go into their account find the refund, ask for a refund, but you can only send it to clients bank account, even though tax return shows "send to agent". What's the story "fraud" - bungkum.

On the tax return forms, isn't the 'agent' actually regarding sending directly to a bank account? And the strange language just because the bank is your agent? By describing as such, HMRC are putting themselves in a strong position if there were a bank collapse - you have directed the money to be sent to an agent (the bank) rather than the debt being settled by sending directly to you.

What about start ups?

angel | | Permalink

If you are a start up then the last thing you want to do is jump straight into VAT registration. Will this mean that you hve no choice but to apply to be VAT registered so that you can continue to act for clients? 

johnjenkins's picture

@Wild Billy

johnjenkins | | Permalink

Yes HMRC should open up its systems (not their investigation data) to agents. As I said before there is nothing stopping them opening to agents who are already controlled by their bodies or Customs. There is nothing in their systems that can't be defrauded by someone who was intent on defrauding them anyway. Much more likely loads of bogus companies set up and the VAT clobbered for a few bob. Fraud amongst agents is minimal and will nearly always get found out.

There are probably just as many bent agents as HMRC officials.

Mass attack on HMRC by criminals mmmmm let me think now. I wonder how they did that? Where did they get that sort of information from? Ah yes didn't someone leave the information on a train, or taxi or somewhere. No good closing the stable door with the jockeys still inside.

This list that is being CONSIDERED was put on the table years ago and still hasn't moved on and it never will. Agent strategy won't even get the start that WT (now being replaced by a blogg) did.

I'll go even further. We only need HMRC for Customs, debt collection and investigations, everything else can be done by us. In fact if HMRC disbanded, their workforce would be taken on and virtually all problems would disappear.

stepurhan's picture

Failing my test    6 thanks

stepurhan | | Permalink

HMRC fail my test for being a competent authority to handle the tax system. As such, I plan to forbid them from levying tax on me in the future until such time as they prove themselves competent to do so. Sorting out the hideous monstrosity that is HMRC's CT filing software would be a start. Repaying CIS deducted from companies without making them jump through several million hoops to prove the money is theirs would also be good.

Is this a workable plan?

Monsoon's picture

I'm with Stepurhan

Monsoon | | Permalink

Yes it's a workable plan. Let's do it!

re I'd love to be told their reasoning for VAT registration!    1 thanks

ringi | | Permalink

As I understand it VAT registration will not be a requirement, it will just be one of many factors that is taken into account.

As checks are made on a company as part of the VAT registration process, HMRC may be thinking that they don’t need to redo these same checks for an agent that is VAT registered.

It is in HMRC interests to have as many tax payers as possible using agents that are part of the new system, as letting an agent update a tax coding saves HMRC work.    So I expect that any agent with a reasonable number of clients will be let in without many issues – otherwise what is the point of the new system?

Also HMRC checking on your client’s tax history as part of checking on you is not that daft, it would be easy to HMRC to only look at what your clients have done AFTER they have become your clients.     I expect that HMRC will exclude very few agents on the bases of client behaviour; after all changing a tax code could let a tax payer avoid tax just before that tax payer leaves the county for example.

Superb    2 thanks

The Black Knight | | Permalink

Quote [ "It has been reported that at a recent HMRC presentation on the Tax Agent Strategy, a further ‘criteria’ was indicated – that the ‘trustworthiness‘ of an agent may be questioned because of the behaviour and non-compliance of some clients.

The HMRC presenter commented that access to HMRC’s website would not necessarily be restricted but that HMRC would need to be reassured that every effort was being made to “improve the behaviour of those clients”. It has been suggested that this would lead to practitioners deciding not to represent clients with poor compliance histories. We await the outcome of discussions between HMRC and the professional bodies." ]Quote

When will HMRC realise that the behaviour of our clients is not down to us!!!  It is HMRC's responsibility for not doing their job properly.

Perhaps they should investigate those that ought to be investigated (thus supporting our quest for compliance) BUT NO they continue to waste everyones time on the squeeky clean and compliant finding nothing in the process.

We can but wait and see but my moneys on another HMRC cock up and a further loss of tax.

HMRC already have rules for dealing with dodgy agents but they don't. So one can only assume these proposals are for a different reason. To bully proper agents into submission leaving our clients undefended by the law.

I have never understood why when HMRC come across a dodgy agent they don't mine the gold seam and maximise their tax take. All of a sudden you would have compliance or the rats would leave the ship.

HMRC's lack of competence as in effect endorsed the services of these dodgy agents.

 

100% filing on line - I don't think so    2 thanks

leon0001 | | Permalink

I am now aware of two cases where 2013 tax returns were submitted online but rejected because HMRC's systems would not accept the information input. Hard copy returns had to be submitted subsequently. The AAM told me that the HMRC system could not deal with all possible circumstances.

Am I still correct in believing that judges' and other sensitive tax returns still have to be submitted on paper because of security concerns?

raybackler's picture

What about ex Clients?    2 thanks

raybackler | | Permalink

Having got rid of one or two dodgy clients over the years, I am still getting paperwork from HMRC, despite having written to them and to the clients involved.  These clients could drag down our rating with HMRC, even though we don't act for them.  We don't have enough control over who is registered with HMRC as our clients and it doesn't work just deleting them off you client list in the Government Gateway, because that is only for the online services.

I despair at stupidities like having to register for on-line services.  Recently VAT registration has been changed to include automatic registration for the online service.  What about Self Assessment, Corporation Tax and PAYE?  As agents, we want our clients to be automatically registered for online services for any aspect of taxation for which they are registered.  Surely this is what HMRC want too?

Underneath the bonnet HMRC systems are not fully integrated and they are certainly not fully integrated with the online services.  As an example, in November, we had an erroneously issued penalty withdrawn for not submitting P11ds for a client, when we had written that none would be required before the deadline.  We had ticked the P11ds required box on the P35, because the clients affairs were in arrears and P11ds were required the previous year.  The penalty was withdrawn by the Employers Office and we received a written confirmation.  Last week we received a letter chasing the unpaid penalty from Debt Management.  When phoning, we discovered that Debt Management couldn't amend their system because the amount due had not been removed by the Accounts Office.  What that means is that all three departments systems held different data!!

 

daveforbes's picture

VAT registration    1 thanks

daveforbes | | Permalink

I suspect none to date of the fraudsters has bothered with VAT registration and so it is a relevant piece of information in risk assessment. 

Yes, a newly formed company trading from Latvia (apologies any Latvians) may be a legitimate agent but I feel warrants slightly more scrutiny than an accountancy practice in Cirencester with 25 years of VAT records.

JAADAMS's picture

Uncanny timing!

JAADAMS | | Permalink

You wont believe this - but into my inbox has just popped an invite from HMRC to one of their 'Agent Strategy' presentations - 17th Feb in Portsmouth.

I'll go on behalf of accountingweb (and myself of course!) and will write an update giving the lowdown (you know what I mean!)

Anyone who wants me to bring up any particular subject please add a comment below and I'll try to make sure that the subject is answered or at least brought to the attention of the presenters.

Jennifer Adams

Associate Editor

johnjenkins's picture

I am really    1 thanks

johnjenkins | | Permalink

beginning to think that "agent strategy" is not worth bothering about. We bobble along at the moment, so why take on extra crap. You know what HMRC is like. Once they start talking about something (making us responsible for clients compliance) it's not long before it becomes a reality.

the main reason    1 thanks

The Black Knight | | Permalink

The main reason may be that many like me leave errant tax payers on their system to see if HMRC ever do anything about them. I had one client come to see me 4 years out of date, 64-8 to HMRC and started the Job, incomplete records and after numerous letters later another 5 years. I Archived the file.

HMRC didn't even raise a determination and still haven't. Still on the system.

They raised a £100 penalty each year but did not collect this either.

I am going to be marked down for this BUT whose fault is it that this client did not need to pay any tax.

I expect this is the reason they want you to clean errant tax payers as you know they are massaging the figures.

HMRC are the ones that need a kick up the BUTT

 

We have also seen clients complete blatantly fraudulent returns themselves and again HMRC do nothing.

Marion Hayes's picture

@JAADAMS    4 thanks

Marion Hayes | | Permalink

I went to the earlier ones last year which was not as illuminating as I had hoped.

My scenario would, I think, stop me being recognised as an 'approved agent'.

I have worked in Tax for nearly40 years, always as an employee until 2009. I semi-retired and have a small practice from home.

I am not a member of a body, I am not VAT registered, I do not have a practising certificate, I have not to their knowledge been in tax for long and they have no way of identifying my competency.

I do have insurance, I have both PII and Fee insurance for my clients. I am registered with them for MLR, I am registered for Data protection. I am a member of the Tax Faculty.

Apart from clients who have followed me for years I also have a nasty habit of helping out people with problems, volunteering for Tax Help for Older People, helping accountants, and bringing people/businesses up to date.

If they bring in anything which inhibits my ability to act properly for my clients they are being discriminatory and acting against both mine and my clients rights.

Class action anyone?!!!

all a joke    1 thanks

The Black Knight | | Permalink

mydoghasfleas wrote:

As I was reading the comments I received this from HMRC.  Aside from, "What the hell is a Learning Event", each of the five bullet points made me laugh

  1. target the right services and communications to make them worse?
  2. aligning processes might be better with no HMRC involvement!
  3. eliminating duplication might succeed if HMRC got it right first time more than 50% of the time!
  4. Does this not mean,"Supporting HMRC in improving services for their clients including the large number of HMRC staff whose poor performance is a result of poor training and motivation
  5. Should this be happening anyway, rather than receiving pronouncements handed down from a shiny cloud on Mt Sinai?

Agent Services

Find out about the tools and agent services that are available to make dealing with HMRC easier.

How about priorities 1, Some more training for HMRC on matters such as tax. 2, Hiring some more intelligent employees (p.s. paying them more does not do the same thing) 3, Explain that their role is policing the tax system and the collection of tax, and the difference between calculation and collection, evasion and avoidance.

In a recent enquiry. " please explain what the VAT fuel scale charge add back in motor expenses is"

explanation

"oh I thought you were trying to claim capital allowances"

@Marion

The Black Knight | | Permalink

yes it's ridiculous

However the "black market" accountants already prevalent use their clients codes and log on as them.

So the work around is simple. "ar ha Simplification. implement implement implement"

I doubt if you could compete with the tax savings though. Unless you turn to the dark side.

Marion Hayes's picture

mmmhhhh

Marion Hayes | | Permalink

the dark side...

just use our imagination as to the type of clients we would be acting for - oh yes the same ones as now who can't afford the fees needed to cope with the continued flood of incorrect paper.

I have just drawn a couple of mini pension funds and after receiving the first payments tax free a code of 3T appeared from HMRC. When I rang to enquire - not on the agent line sadly - they didn't know where the code came from. We sorted out correct codes, bearing in mind that even in a full year they come nowhere near the pesonal allowance. then came the caveat - when all the different pieces of info come in the computer revises codes as it wishes. Just ring us again and we will put it right straight away.

Surely it's all good news ...    1 thanks

Gone Sailing | | Permalink

When HMRC hand ALL the work over to us and has 3 and half staff left, we can redesign the whole system top to bottom.  Who wants to be Chancellor?

@Wild Billy

chatman | | Permalink

Wild Billy wrote:
I want HMRC to have safeguards in place and demand high standards from Agents

Who are you to demand high standards from agents? As far as you are concerned, agents simply have to comply with the law. Who are you to even comment on the standards of agents who do a completely different job to you?

Why don't I believe that they know what they are talking about

Donald6000 | | Permalink

Reading between the lines of the documentation about what HMRC wants and what they don't want, I would guess that they don't want unqualified agents and they don't want voluntary agents and they don't want charity workers. What they do want is professional firms, some of whom have already briefed against HMRC and helped funds to be directed to shell companies and the Cayman Islands.

 

That's the kind of treachery being practiced by HMRC, the kind of two faced skulduggery. They have no moral compass and are helping join similar bunch of fools who wanted grannies to be CRB checked whilst taking their grand-kids to the local football match.

 

I don't see anything within the HMRC documentation which states that they are going to enjoin agents to make a better tax system. I see plenty of evidence that they are against agents, especially small and voluntary ones and would do much to get rid of all of us. In short, their documentation is a crock.

johnjenkins's picture

I personally

johnjenkins | | Permalink

don't think that there will be any one man band business in whatever form after the next ten years. This will be one way HMRC will get rid of the agent side of one man band. Eventually it will only be HMRC verified agents only that will be allowed to submit returns.

The Devil's Embrace

moneymanager | | Permalink

The FSMA and the statutory bodies that ensued have resulted in the near complete collapse of the small (often one person), ethical, dedicated independent financial adviser. In the early day of even LAUTRO I said that regulation would not stop until nobody actually bought or invested in anything but the regulator could rest assured that they had done so compliantly.

The outlook for small and micro accountancy services does contain similar threats.

carnmores's picture

one man bands will have to incorporate

carnmores | | Permalink

that will throw a spanner in the works

Oldmanwetmix's picture

Security concerns for public office holders

Oldmanwetmix | | Permalink

Yes you are correct that judges and ex judges have to file paper returns. I assumed it wasn't because of security, but so that those in public office didn't find out what a mess the rest of the system was in!!

Is a 2 tier system needed?

PracticePartner | | Permalink

I think its hard to argue that there shouldn't be some minimum standards for agents, particularly given that the accountancy profession is unregulated.

At present we have a de facto 2 tier system with some registered agents offering "filing only" services for personal tax returns for example. They don't act as agents in the sense that they get 64-8 type authorisation for their clients, so perhaps there ought to be a 2 tier system that recognises the distinction (or a 3 tier one to separately include those acting non-commercially on behalf of someone else). I'd argue for the higher level requirements to include PI cover, but I'm on the fence on qualifications and membership of a professional body/having a practising certificate.

Susan Frank's picture

Interesting discussion

Susan Frank | | Permalink

As you can see I'm up early - as far as I can see from the thread of this discussion - lots of people are up in arms? Why ? The only pitfall I can see is the Vat registration - and no I'm not Vat registered and don't intend to be unless I need to - the criteria to me look perfectly reasonable. Although I am assuming that an Agent only has to meet most of the Criteria and not ALL - which a lot of commentators assume is required. if I am not accepted into the fold then I'll write or see my MP - I have a practice licence, I'm insured, registered for money Laundering , registered for DPA , and registered with my prof body - I am not worried by this. I will of course write and consume humble pie when I am not allowed to join the elite band of agents that HMRC will accept.

johnjenkins's picture

@Susan

johnjenkins | | Permalink

Most of us aren't really worried. We know that HMRC will do whatever they want regardless of our input, and we seem to be bumbling about quite nicely. What we are concerned about is when HMRC have a brilliant idea then they go and destroy the very element that made it a brilliant idea in the first place. WT is a classic example. WT should have led to HMRC opening it's doors first to practicing accountants then to other agents. By now we should have been up and running with HMRC only collecting money and doing investigations and aspect enquiries. Still let's look on the bright side, this time next year someone will post "whatever happened to agent strategy".

the only thing that's certain

The Black Knight | | Permalink

The only thing that's certain is that HMRC are universally C---- at everything.

Including ideas, research, consultation, implementation and reading their own rules.

When you think about it, it really is quite an achievement.