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Working with agents - Reports to professional bodies

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15th Feb 2010
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This article looks in detail at the proposals for reporting members of professional bodies to their body, and highlights the issues involved. There was broad agreement in the first consultation that HMRC should use this power more effectively, so the principle seems to have been accepted.

The law

The tax authority has a statutory authority to lawfully disclose information to a body regulating a profession, in relation to misconduct on the part of a member which relates to an HMRC function. The legislation is in Section 20(3) of the Commissioners for Revenue and Customs Act 2005 (CRCA); in more detail, section 20 sets out powers for public interest disclosures. Information may lawfully be disclosed when

  • The disclosure is instructed by the Commissioners (either in general or specific terms);
  • The disclosure is covered by one of the subsections of s 20 – specifically in this instance under subsection 3 a disclosure to a professional body acting as a regulator of misconduct by a member of that body in relation to a function of HMRC, and
  • The disclosure is in the public interest.

There is therefore little doubt that the powers already exist for HMRC to make a disclosure. The current consultation seeks to establish a method of reporting to be used by the tax authority which falls within these statutory powers.

Misconduct

Misconduct is not defined in CRCA. Discussions with the main professional bodies in the past has indicated that there is broad consensus about what it means – conduct likely to bring discredit on the member, their professional body or the profession as a whole. The policy intention when CRCA was drafted was that the term should mean “frequent error or unethical behaviour”. HMRC’s current view is that the term can be interpreted to include persistent errors, failures to take reasonable care or negligence. HMRC also believes that this interpretation is supported by the “public interest” requirement.

New procedures

Where a tax agent is a member of a professional body which acts as a regulatory body the route is open for HMRC to make a formal report to the body. However, the tax authority views this as the last resort, and will therefore contact the agent directly where it believes that grounds exist for a report to be made to a professional body. This approach would identify whether there was indeed a problem, alert the agent to HMRC’s concerns and attempt to agree a mechanism which would enable the agent to address the problems. Members may at this point seek support from their professional body, but if a solution can be found no report would be made.

Only where a member did not wish to engage with HMRC, or a problem persisted despite efforts to resolve it, would HMRC seek to take formal steps to disclose details to the professional body.

Those who are members of bodies which do not perform any regulatory function would be treated in the same way as those tax agents who are not affiliated to a body. Work will continue to establish appropriate civil sanctions to deal with poor work by such agents, but the initial approach to the agent regarding concerns identified by HMRC would be the same as for those who are members of a professional regulatory body.

Safeguards

The consultation states that in every case, HMRC would ensure that the misconduct was serious enough to warrant disclosure. This would require authorisation at a senior level independent of the officer who has investigated the behaviour. It is not absolutely clear from the consultation what level of persistent errors and failures to take reasonable care would trigger a concern, but it is to be hoped that this will be agreed with the professional bodies during the implementation stage.

There are some indications that the work in this area, although further progressed than measures to deal with unaffiliated agents, would not commence in advance of other powers, so that members of professional bodies are not disadvantaged by having sanctions available against them before there are any measures to deal with other agents. Confirmation from HMRC that this will be the case might be a subject you could usefully comment on in your response.

HMRC does recognise in the consultation that there should be a reciprocal route for tax agents to discuss the behaviour of HMRC officers where they feel that an officer has behaved inappropriately. You might like to comment also on how you think this might work.

Response questions

How you frame your response to this aspect of the consultation is of course up to you, but the following broad questions may help you to formulate your thoughts :

  • Do you agree in principle that reporting agents to their professional body is an appropriate way to deal with poor work (however defined)?
  • Do you think that HMRC have the balance right in seeking to approach the agent first before making a report? Are there any circumstances under which you think a report should be made without speaking to the agent first?
  • Do you agree with the scope of behaviour likely to trigger a report – that is
  1. Persistent error
  2. Persistent failure to take reasonable care, and
  3. Negligence?
  • Can you think of any other safeguards that should be considered?

You can respond by email to [email protected]
 

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By wct1954
15th Feb 2010 17:01

Should HMRC have the power to report to professional bodies?

Broadly speaking I do agree with the suggestion above, but on the basis that HMRC should have thorough consultation with those bodies (and therefore their members) in determining what constitutes a "reportable" occurance.

Due to the fact that some things are more serious than others, my proposal would be to have some kind of agreed points tariff system whereby "reportable occurances" can be graded and that, similiar to driving offences, when a determined number of points is acheived then a report will be made to the relevant body.

This opinion does not seek to determine what the penalty would then be and that is the subject of a further discussion.

The above suggestion obviously does not work where someone is working outside of a professional body, but it's food for thought.

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