We haven’t been able to get a good hard look at HMRC’s digital tax strategy - but already accountants can feel the earth shifting beneath their feet.
The personal tax account - as it is now known - is live, and accountants are no longer permitted to log into SA online using their client’s credentials. The uncertainty for accountants is that HMRC said in their last agent update that “the personal tax account isn’t currently designed for use by agents”.
“An agent impersonating a client through using their client's personal gateway credentials is an inappropriate security break and often inconsistent with professional body standards,” said an HMRC spokesperson. “Where HMRC identifies that there has been inappropriate access to a business of individual's tax affairs, it takes proportionate action to inform the parties whose credentials have been misused.
It begs the question: what happened to Agent Online Self Serve (AOSS)? It seems to have been completely overtaken by the PTA project. Kevin Hart, chairman of BASDA and Sage UK’s strategic alliance manager, shares this suspicion.
“It’s clear that AOSS is of its time, which sounds crazy because its only just been released,” said Hart. “We’ve spent quite a bit of effort and time with various teams at HMRC because of the challenges they’ve got across so many ways of registering clients on behalf of agents. Bringing it all together seemed exactly the right thing to do. It appears to us that the PTA has overtaken the AOSS in some regards.”
For obvious reasons, accountants are anxious to understand how they will be able to access their clients’ data. Unfortunately only morsels of information are currently available, but HMRC is pleading patience: “We will be improving the service to provide agents access, until then you should not try to access it on behalf of your client”.
“There are two discrete entities here,” explained Hart. “You’ve got the administration of clients they can work on behalf of, and then you’ve got the working on behalf of their clients.
“Certainly AOSS addresses the former, and it’s always been limited in that scope. I wouldn’t say it’s a one-time only activity, but it’s quite infrequent that you’ll need to administer your clients if you’re an agent.”
He continued, “But, of course, dealing with their circumstances on an ongoing basis, especially if the quarterly filing is approved and mandated, the agents are going to need access into the respective PTAs on a regular basis.”
How HMRC plans to mix the AOSS permission structure and the PTA itself is still yet to become clear. “I could crystal ball gaze and say that AOSS may well be superseded by a client administration add-on to the tax accounts,” offered Hart. “Alternatively, they could actually link AOSS into the digital tax accounts. It’s difficult to see what way they could go - but certainly the two different facets will need to be hooked up.”
For Mark Purdue, Digita’s manager for tax products, third party software providers will be “integral not only to the success of the project, but also to minimising the impact on the accounting profession, allowing you to get on with your client engagement with as few disruptions as possible”.
We already know that HMRC’s API strategy means the data within the department will be opened up to third party software suppliers, so it seems that the agents will rely heavily on their tax software to access client data.
“Accountants will be able to view and, if necessary, edit their clients’ tax accounts directly via their own agent gateway”, said Purdue, “but this may prove cumbersome and tricky to interact with directly. Third party software will be there to deal with the interaction between you and each client’s tax account.”
Policing the PTA
It’s not known exactly how the tax department will police access to the PTA. “The security policies are still developing,” explained Hart, “but naturally with these systems you can pick out IP addresses and potentially CPU unique addressable data. They could see trends arising, for example if a block of ten customer accounts seem to be accessed from the same IP address.”
So if an agent uses a client’s login, this is registered as unusual behaviour for the client who hasn’t used that agent’s computer before. If the agent alo uses other client logins on the same computer, HMRC’s servers could potentially assess the situation to be fraud and the agent as compromised.
As AccountingWEB’s 2015 member of the year Tim Vane summarised it: “The fraud prevention algorithms may also decide that the agent related to all these clients is also compromised and block that agent ID as well, along with other agent IDs associated with the same firm. Possibly all other clients associated with that firm will also be flagged. It is likely that HMRC systems will be programmed to block everything, then allow human ops to determine what the situation is.”
Accounting in the age of “Assured Agent” status
Even core aspects of the HMRC charter are falling under Making Tax Digital’s umbrella. “You can expect us to treat you even-handedly,” reads the HMRC charter. But what happens to this central tenet when the tax authority goes ahead with its much vaunted assured agent status? In 2015’s Hardman lecture Robert Maas, a tax specialist with over five decades of experience, derided the plan in the strongest terms.
Reporting on the event, Rebecca Cave wrote: “Maas doesn’t want to be an ‘assured agent’. He hopes that no other member of a professional tax/accountancy body would want to be one either, as tax professionals should be seen to be acting for their clients and not for HMRC.”
Cave’s article elicited a whirlwind of comments, mostly in agreement with Maas. Perhaps the most strident was Norstar: “I’ll say this now - if this comes to pass, and my firm is compromised further in its ability to interact with HMRC, I will be looking at legal action, and I’d welcome others to do the same.
“I didn’t study and work hard for years, building up a loyal client base of hundreds of people who depend on me, just so that HMRC can come along and damage that by casting judgement on me from afar.”
Another concern raised by AccountingWEB members was whether HMRC will use it to punish obstreperous accountants. “It really will get to the stage where agents will fear any dispute with HMRC in case they subsequently decide they're untrustworthy because they don’t do as told,” observed Cparker87.
Tony Margaritelli, chair of the ICPA, also chided the lack of clarity on how assured agent status would be awarded and revoked. “Will they withdraw assured status as easily as they will give it?” he asked. “Will it be up for appeal? Remember this is a department that cannot answer a telephone in a reasonable timescale. We all need to get together to fight this.”
Not everyone agreed with Maas’s assessment, though. A notable argument for HMRC’s assured agent status plans concerned unqualified accountants: “Unqualified accountants need to be regulated by someone,” wrote Ken Howard. “If they don't have a professional body, then HMRC needs to act as such and enforce similar rules of conduct and ethics. If there are mistakes or misconduct, then HMRC would have the power to remove/reduce the agent's status.”
But also adding, “I just fail to see why HMRC want to get involved in regulating those who are already subject to adequate regulation from the accountancy bodies.”
TaxMatters agreed with Ken Howard’s take, albeit more forcefully: “If [Maas] saw some of the cases we have to sort out which result from unqualified people setting themselves up as accountants and taking a percentage of the refund he would soon change his mind. I am in agreement with the HMRC strategy as should any self-respecting tax adviser be.”
One of the biggest hurdles facing the PTA, however, isn’t technology or wayward accountants - it’s the British public.
The government’s own research on digital exclusion - defined as having no access to the internet - indicates a worrying trend among the self-employed. Nineteen percent of the self-employed with no employees surveyed were classified as digitally excluded.
HMRC seems to be ignoring this glaring issue by putting the horse before the cart, providing no clarity on agent log-in, hindering the accountant’s ability to help their less technologically adept clients across the digital divide in a timely fashion.
If this problem can’t be bridged, all talk of being the world’s most advanced tax administration will be rendered moot. An HMRC spokesperson told AccountingWEB that the tax authority will ensure people have access to guidance and support where needed, including access to telephone filing.
They added, “Throughout 2016 we will run a series of consultations on these changes giving businesses and their representatives plenty of time to feed into the development of these changes. People will also be able to nominate a ‘trusted helper’ to manage their affairs on their behalf, such as a relative or accountant.
“The changes necessary for Making Tax Digital will be phased in between 2018 and 2020, with each stage being tested thoroughly before implementation."