Competent or otherwise

1 Firstly anaylse the actions of those that one feels are "incompetent agents" from the past and prepare a set of minimum standards for the rest to aspire to...

2 Anaylse the actions of past "Rogue Agents" and prepare a defence system to prevent re-occurenece.  From the agents that I have heard of (three in all) most seem to have the refund paid the the agent who then disappears. 

For those who fail a system of support to help them meet the standards.  Sometime I guess just a letter pointing out the problems would probally be enough

Self-Regulation by a none HMRC body.

I am sure others will have better ideas.

This whole idea is fraught with potential problems. We must always remember the basis of our whole legal system, that people are innocent until proven guilty.

The ability to potentially take away someone's livlihood is a serious matter and cannot be left in the hands of an unelected, undemocratic body. 

Nor must sanctions be allowed until after a proper process has been followed which must (to comply with EU legislation) include full details of "the prosecution case" being put to the "defendant" and the "defendant" being given proper time (including funding to pay for expert advice) to respond.

There MUST then be an independant tribunal (court) to adjudicate on the veracity of the allegations. Should an agent be found not to have made errors there must also be a system of compensatory awards to compensate for not only costs, but also loss of income, distress, etc. I would estimate that an agent wrongly accused and potentially facing the loss of his business would have a reasonable claim for distress alone of, perhaps £50k. 

Without ALL of the above safeguards in place I would certainly be confident of successfully being able to pursue a claim through the european court.  

ALSO, the same system must be open to agents wishing to put before the "court" evidence of corruption by HMRC staff. (I have in mind the file currently on my desk which I will be completing today ready to be handed to the police tomorrow regarding one such HMRC officer).

1. Any system MUST be independant of HMRC.
2. Any system MUST comply with our legal system.
3. Any system MUST be totally open and transparent.

Given that the ultimate sanction of such a system is the removal of someone's ability to continue to earn a living, I am far from sure that any such system is legal under EU legislation or under our own constitution. Certainly is is a legal minefield.

Medical profession, as well as legal one, already has disqualification procedures, eventually leading to barring from practicing. Some good ideas/experiences could be adopted from there.

As for new entrants, I strongly believe in obtaining qualifications before starting practicing.

At the end of a day professional bodies would not grant practicing certificate before qualification is obtained and required level of experience reached (i.e. ACCA requires at least 2 years of PQE before one can even apply). They must have a reason for that!? I appreciate there will always be black sheep in a herd, therefore restricting NEW entrants to qualified only, would not eliminate  dishonesty and/or failures (etc.), however it would certainly mitigate the risks.

At the end of a day, completing education (whether professional or not), does serve as a proof (unless proved otherwise) of certain level of knowledge, required to act as professional in a field.

 I hope I am not making grave misstatement saying that 'Bob the builder' would not be allowed to represent third unconnected party in court (I suppose exceptions might exist) just because he decided he is capable of doing so.

I hope I am not making grave misstatement saying that 'Bob the builder' would not be allowed to represent third unconnected party in court (I suppose exceptions might exist) just because he decided he is capable of doing so.

Posted by Suntree on Sun, 05/06/2011 - 12:04

Actually anyone is entitled to use what is known as a "McKenzie friend" to assist in court if you are unrepresented. This does not need to be someone you actually know, and is often someone with expertise in some field. For example if HMRC sue a client for non payment of tax an accountant could represent his client as a McKenzie friend. Strictly speaking a McKenzie friend cannot actually represent you by examining witnesses on your behalf etc., without the courts permission. However, in practice, the courts run a grave risk of any adverse findings being appealed if they deny this representation as occured in McKenzie v. McKenzie 1970  so the courts tend to give permission assuming that the McKenzie friend acts in a reasonable manner whilst representing you. 

'McKenzie friend' would rather be an exception, as I assumed there might be, to aid hardship.

Developing further, under equivalent of  'McKenzie friend'  rule would fall relatives, friends, etc of taxpayers who choose not to appoint paid agent.  However these will be exceptions rather than rules.

'McKenzie friend' would rather be an exception, as I assumed there might be, to aid hardship.

Developing further, under equivalent of 'McKenzie friend' rule would fall relatives, friends, etc of taxpayers who choose not to appoint paid agent. However these will be exceptions rather than rules.

Posted by Suntree on Sun, 05/06/2011 - 16:09

The use of McKenzie friends is likely to become more widespread with the increasing restrictions on legal aid. Already in what used to be termed the small claims court the use of McKenzie friends is becoming the norm rather than the exception,  in the criminal field again it is not uncommon in magistrates courts in minor cases.

I have acted in what, strictly speaking, is this capacity many times. Being something of a soft touch I've encountered terrified defendants outside magistrates courts and small claims courts, unrepresented, and clearly incapable of representing themselves. (Its amazing who you meet whilst getting a quick nicotine fix outside the court). I hate hanging around all morning waiting when cases are postponed 'till the afternoon, or indeed put off till the following day, and have often volunteered to represent some terrified defendant rather than have a totally wasted journey.  Technically I have not been engaged to represent them via their solicitor (they obviously dont have one), so, I am technically acting as a McKenzie friend.   It's amazing how many supposedly "cut & dried" cases in the magistrates court crumble and collapse once a little expertise is brought to bear on them - which is why I have always viewed magistrates courts as having nothing to do with justice - they are sausage factories staffed by amateurs (magistrates) and designed to convict with the minimum expense regardless of justice.

The point of a McKenzie friend, or indeed a barrister or a solicitor with rights of audience, is that they are not (or should not be) personally involved, and can therefore conduct the case without becoming emotional. They also need to be able to assist the court by putting your case clearly, and, by avoiding irrelevencies and sticking to the issues which need to be decided.

When dealing with some specialist field, like tax, then some level of expertise in that field is obviously adventagious. For example if facing money laundering charges there are, no doubt, many very capable barristers around, but an expert like David Winch acting as a McKenzie friend would, I suspect, be able to do just as good a job, if not better.

This is why I find the idea of HMRC having the power to effectively stop or restrict agents trading to be utterly unacceptable. The proposal flies in the face of the very foundations of what is just and right. They must not be allowed to become judge & jury and some truly independant arbitor must be put in place before any restrictions can be imposed. I also have serious reservations about how such an independant arbiter might be controlled.  When the police complaints commission was replaced by the IPCC we were told that the IPCC would be independant and would not employ ex police officers (this was a major complaint regarding the Police Complaints Commission), yet, a few years down the line much of the IPCCs staff consists of ex police officers, and it even passes cases out to other forces for investigation (with all the potential for bias that entails).  Now it is seen as no more independant that the old body was.

I can see the same happening with an independant arbiter, give it a few years and it will be stuffed with ex tax inspectors and about as capable of delivering justice as the numerous existing discredited "watchdogs".

I take CD's point abut deprival of a living and agree - but if there is a lower level where a practitionwer was contacted to highlight his performance and offer support - an action which is not permitted to go any further than that - should that be done by an indep. body? We're potentially talking very expensive here.

Posted by RebeccaBenneyworth on Sun, 05/06/2011 - 18:38

And if the agent does not agree with the criticism and believes, for example, that a particular tax inspector has "got it in for him/her" what appeals process would be available to them?  Surely they must have the option of rejecting unreasonable criticism and refering it to whatever "independant" body there is.

After all, I assume HMRC would run a "3 strikes and your out" type policy, so the potyential ramifications remain the same, just a little longer term.

I particularly ask in light of the case I'm dealing with at present, which (what i'm allowed to state at this time) amounts to -

• Accountant files formal complaint about tax inspector
• Complaint upheld and inspector gets slap on wrist (and prospects of promotion badly damaged)
• Inspector then embarks on course of harassment by pursuading collegues to "pull" every set of accounts submitted by accountant burying them in "routine" investigations. 

Abuse of position does occur, and I can see how this could make it easier still for such people to harass agents, so there has to be some redress for the agent built into the syatem, and indeed a system of compensation where "advice" or criticism is found to be unfounded and/or malicious.

Policing our profession is going to be very expensive, since the most costly mistakes/frauds seem to come from the biggest firms of accountants (viz the latest and still-ongoing cause of our global recession could be put firmly at the feet of the accountancy profession … how come that nobody blew the fuse on the mad investment/mortgage policies of the US banks? … OK, so this is a tad simplistic, but it still holds enough grains of truth to be seriously uncomfortable for our profession).

So, if policing the profession is going to cost, and it is bound to, how many smaller practices are going to be put out of business? And with smaller accountancy businesses going to the wall, the costs for smaller businesses are going to rocket (£150 for a tax return now compared to £1200 with a more successful accountancy practice next year).

My next major worry is one which a lot of respondents have already aired … if we are to be policed, who’s going to even the playing field and police HMRC? In my opinion most of the current problems with the tax system are not due to the agents, but due to HMRC itself … the government can’t continually slim down an outfit and yet still expect it to perform better and better every year.

After all, one of the major arguments in the 90s for Self-Assessment was the huge percentage of errors made by HMRC when processing tax returns, so the simple way out of this was to move the burden of correctness away from HMRC and plant it firmly on the punter (Brilliant!). Oh, and government’s cash flow got improved at the same time, as a bonus.

The only way round this I can see is to have the grandfather clause, whereby people currently in the profession, whether Q or QbE, are treated as trustworthy, and signed up as appropriate to whatever level of input to HMRC’s files as suits them (assuming, of course, that the agents adapt their computer systems and security to match the level of direct data input that they opt for). New entrants might have to be members of professional bodies, or maybe pass a certain certificate with HMRC, whatever, but as many have said, that proves no more competence than not having a certificate (certainly passing all of ICAEW’s exams back in the early 70s gave me zero help with the type of work that I now do, viz. mainly base-level client bookkeeping and most shades of low/medium-complexity taxation).

Any regulatory body has to be independent of HMRC. Most of my problems are either clients thinking they are cleverer than HMRC, simple client sloppiness over bookkeeping, or HMRC itself not dealing with the type of everyday request like 64-8s within a reasonable time … my hair is thin enough without any more tearing it out in anguish at months’ long delays … and whereas I can pick up and deal with most of the problems my clients encumber me with, I don’t have any recourse for dealing with problems HMRC causes. Any regulatory stick needs to have two handles, so that not just HMRC has the power to wield it.

I honestly can’t see why HMRC just doesn’t simply put into practice most of its ideas for improving the agent/HMRC interface. It doesn’t need a consultation document for this. Just drop the idea of regulation, forget about policing accountants (after all, the major accountancy professions have an abysmal record of doing this, so why should any other body be any better at it?), and just improve the current system. HMRC’s premise is built round the idea that agents are the problem, and for the life of me, I can’t see this as being true. The agents haven’t dragged the system to its knees. The government has.-- KH

of one practice against another is totally flawed. There are far too many areas to consider. An agent might have independant means so can afford loads of staff who can chase clients. Contrast this to the agent who cannot afford the staff and consequently his uneducated clients might fall fowl more than once over compliance. If their client bases are similar then one agent will become the standard and the other incompetent.

HMRC have to realise, like them, agents are not perfect and should not be penalised for genuine misjudgement or errors.

If we do go down that route then HMRC will have to set up the same system to deal with their "errors and misjudgements.  

It's not just clients who are uneducated, you might fall foul of the new system :0)

keyboards can be eggasperating OGA.

Rebecca, we have a similar situation where the agent has even been jailed and still carries on trading. I don't think that the agent can be stopped - no doubt WD will confirm.

The point is you cannot make laws to stop a minority (who won't stop anyway) at the expense of causing problems for the majority which seemed to be the GB culture.

By the way it now takes 81 days instaed of 57 to close down a PAYE scheme.

I find telling people that you work with tax is like admitting you are a doctor – there is always a question or a story. A dentist who asked me if I thought it was right that his accountant never wanted his actual records. They knew what he should have spent if he told them his gross income and superannuation. A newly incorporating business advised that it was okay to have the car in the business (Ltd) as long as he was prepared to be a bit crafty on filling up and going to the right garages for work on the family cars. And then of course there is the man in the pub.....

 Your reputation and the relationship with your clients is the hardest thing to achieve and the easiest to lose.

 I have had many clients over time taking tax planning advice from specialists. In some cases I am presented with a document which details the scheme number, entries required on tax return, and wording for the white space note. Part of participating in the scheme brings the condition that these details are entered irrespective of my opinion of the quality.

We have all seen examples where accepting the Inspector’s assessment costs our client less than continuing the argument, even though the Inspector was patently wrong. Another black mark?  

I have taken on new clients where I am amazed at the poor tax work, as I am when I see some of the questions and responses in these forums, but I also know that the majority of these cases are not picked up by the Revenue at all. Nor are they necessarily an indicator of the firm’s overall competence  - just one person that had a bad day or got out of their depth.

For these reasons I think the tax profession is the only possible assessor. None of us as individuals, including HMRC, have an overview of sufficient breadth and or quality of information to judge, even though we have the technical knowledge to assess some of the work involved. I thought that the CIOT already had an overview system in place – could we be admitted as members for regulation purposes? No initials after our name but the right to say regulated by? Then HMRC, ourselves and clients would have a referral system that should create a database of sufficient quality to suffice. The membership fees should meet much of the costs. The firm would then be able to respond without HMRC involvement and stages of intervention decided upon.

We would never be in a position to stop someone trading, and I don't believe we should have that power, but the equivalent of a Kitemark which can be withdrawn as a last resort, supported by an amalgamation of all the relevant bodies, is something everyone understands.

-- Marion

I thought that the CIOT already had an overview system in place – could we be admitted as members for regulation purposes?

Posted by Marion Hayes on Mon, 06/06/2011 - 12:57

This is a valid point Marion. I support the opinion that Professional Accounting/Taxation bodies should be supervising scheme, HMRC having somewhat advisory voice. 

However, I somehow doubt that professional bodies will be as relaxed and generous as HMRC expected to be, as to accepting that all to the date practicing paid agents are competent (until proved otherwise). I have no doubts, that in exchange for the right to add 'regulated by...' they will request some proof of competence.

I think everyone is overcomplicating this.

Surely it should be simple -

1. ALL existing agents should be registered without question.
2. There should be NO fees involved.
3. If HMRC feel that an agent isnt up to standard (whether qualified or QBE) they should put their case together with evidence in support to an independent body.
4. The "accused" should them have full access to the file, and the right to require any further reasonable information he/she requires - then prepare a "defence".
5. Whether HMRCs claims are upheld or not should themn be for the independent tribunal to decide either on the papers submitted, or, at the "defendants" discretion, at an oral hearing.
6. The tribunal then has the power to remove the accused from the agent list, or order additional training, or indeed find the case unproven and award damages against HMRC for distress caused.
7. This should be totally independant of HMRC and the institutes - but - should be binding on both.
8. When a case is refered to the tribunal, until such time as the agent is removed from the list (if indeed they are) HMRC must either continue to accept accounts submitted without prejudice, or, pay a weeky set fee of, say, £500 a week to the agent for loss of earnings until such time as the case is heard.

This would ensure that innocent agents dont suffer unduly, and, should ensure that HMRC dont put frivolous cases before the tribunal.

I agree with C_D's proposals.  They appear balanced and well thought out.

TheAncientOne

I find little to disagree with in CD's proposal - seems to be a perfectly reasonable order in which to deal with the issues. I have a couple of minor reservations, though:

If unproven, HMRC should certainly be required to pay the agent's costs. But damages for distress? I'm not so sure. I guess it's relatively easy to demonstrate/fabricate distress in order to win some form of compensation, but it sounds very much like the American way of doing things - I abhor the ambulance-chasing "claim everything you possibly can" mentality (that is a comment aimed at such general behaviour and not at any one individual).

Loss of earnings? I'm not quite sure how that will arise. Temporary suspension from the register until the case is heard (I would argue strongly that there should in fact be no such removal) should not result in loss of earnings. It may make the agent's life a little more difficult in not being able to access certain information, but it shouldn't result in any loss of client income. Again, any additional costs incurred as a result of such suspension ought to be covered in an award of costs in the case of a successful defence (or is that defense?).

Yes, I'm with C_D

Polly

Whilst supporting WD's proposals, I am concerned as to the make up of the tribunal. If I found myself in front of them, I'd want them to understand the reality of dealing with HMRC (and clients!), so I'd want a jury of my peers rather than a selection from academia/governing bodies etc.

with WD. However this will only get rid of the incompetants off the agents list. No doubt they will still be able to get info, but not on a fastrack basis.

So my point is and has been all along, from HMRC's point of view is it all worth it. What is the best they can hope to achieve if WD's plan is adopted?

 If I found myself in front of them, I'd want them to understand the reality of dealing with HMRC (and clients!), so I'd want a jury of my peers rather than a selection from academia/governing bodies etc.

Posted by pawncob on Tue, 07/06/2011 - 11:05

I agree that the "board" should be made up of QBE's as well as members of the various institutes. ALL should be actively engaged in day to day practice.

Quite how an impartial tribunal can be found I'm not sure. What we DON'T want is something like the old General Commissioners which were rather akin to magistrates - and had little understanding of life in the real world.

Why cant the panel be other practicing tax agents?

I've made a point of not upsetting any of the other local accountants, but I wouldn't guarantee it. I'd rather not be judged by the man who lost a client to me last month.

I would strongly object to anyone local to myself.  Apart from not trusting a large proportion of them and the fact that many of them are of poor quality, plus one of the  leading ones is as bent as the proverbial nine bob note, I do think that a Panel should not be made up of local people in the same trade as they surely would not view anything with an unbiased eye; especially when we have taken business from them when they are dilatory/too expensive/untrustworthy etc.  Those particular firms do not like my firm and I imagine that there are many agents/accountants in the same boat. Any Panel which may be set up should be out of the geographical area they are looking at.

TheAncientOne

I also like C-D's ideas .... count me in on his side regarding registration, zero fees (particularly like that point!), referral to non-HMCR tribunal, etc.-- KH