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Do qualifications matter as HMRC rates agent risk?

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6th Mar 2008
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Agent qualifications are a factor to take into consideration when reviewing the behaviour and performance of tax agents, according to some of the minutes of HMRC’s agents and advisor steering group, and published on its website.

The group has been examining the performance and behaviours of tax agents; acknowledged by HMRC’s Dave Hartnett as the front line in UK tax compliance.

One of the problems highlighted is that it is difficult for HMRC to identify unqualified agents and there is “no top-line data on agent qualifications.”

Section 20(3) of Commissioners for Revenue and Customs Act 2005 (CRCA) allows HMRC to report accountant’s misconduct to their professional bodies, as follows:
General Instruction 3.1
DISCLOSURE TO: an accountancy body which has responsibility for the regulation of members of the accountancy profession.

DISCLOSURE OF: sufficient information for the body to investigate alleged misconduct by a member of that body where disclosure of that information has been assessed and passed by the Commissioners’ Advisory Accountant and authorised by 2 Commissioners.

PURPOSE: to inhibit and deter accountants’ misconduct relating to a function of Revenue and Customs.

Whilst s 20(3) is a blunt instrument, its effectiveness is severely curtailed, as not all professional bodies have the same disciplinary process and unqualified accountants have no professional body in which to be reported to.

Under the new Money Laundering Regulations unqualified agents must register with HMRC. The Steering group minutes reveal that the thought has occurred that MLR might be used by HMRC as a way of weeding out poor performing unqualified agents under the "fit and proper" tests.

Agent behaviour and performance are driven by a number of factors, which include the complexity of tax legislation. Although HMRC is keen not to publish any rankings or risk factors, it is difficult to see how agent effectiveness can be otherwise assessed.

By coincidence, a list which ranks agent qualifications has already been privately drawn up by a member of the Institute of Chartered Accountants in England and Wales (ICAEW), and accidentally published, it has been reported this week. The list, which has no official ICAEW endorsement, and was prepared by a council member is said to rank the members of the Consultative Committee of Accountancy Bodies (CCAB), which includes the ICAEW at the top, followed by various other qualifications and ranking bookkeepers at the bottom.

Editorial comment: A witch hunt?
There is an interest in the merits of some accounting qualifications following attempts to have the term "accountant" legally protected. The ICAEW has been looking for examples of where its members have been called in to solve a situation created as a result of a client first going to an unqualified accountant. From HMRC's perspective things are terribly confusing; many ex-tax inspectors are unqualified and now work as tax agents.

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Replies (9)

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
07th Mar 2008 17:28

Tax lecturer?
I once told the chap selling me a large Christmas tree (for cash) that I was a tax lecturer when he enquired.

The poor man almost fell off the back of his lorry in shock. He thought I said "tax inspector". I suppose with your head in a pile of Nordic Fir it's understandable!

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By pauljohnston
10th Mar 2008 18:22

CPD
I feel Mark Lee makes a good point but it seems that it is only the professional bodies who ensure its members do just that ie obtain CPD points.

Whatever one feels about qualifies /unqualified agents I hope that in due course HMRC ensures that those who wish to remain an agent do have some means of being up to date otherwise its greater reliance on agents could be misplaced.

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By Simon Sweetman
10th Mar 2008 18:08

conspirator, moi ?
I hate to spoil a good conspiracy theory, but I am a member of the Agents and Advisers steering group and this is certainly not where it's head is at. From memory the idea came up but was given short shrift - I suspect that HMRC's people on the group were not even aware of the proposed role in money laundering.

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By User deleted
11th Mar 2008 09:41

Paul
You took the words out of my mouth! Exactly.

I was also going to say to Simon, that there is more to the whole issue than any steering group's minutes. Figures show that the ICAEW, is shedding sole practitioner members like they are going out of fashion. I wonder if the position is same for the other main accounting bodies? You and I know that there are more agents/accountants around than ever and so it is quite plain to see that more and more people are not bothering with qualifications.

Going back to CPD, tax is so taxing and changeable at the moment that I seriously doubt that any person can ever say that they are fully up to date, no wonder that HMRC's helpline staff struggle at times.

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By User deleted
11th Mar 2008 15:31

The unofficial ranking of accountants - where?
No-one so far has asked my burning question. The article mentions a list out there prepared by an ICAEW member (unofficially) and published. How can I get a look?

If it appeared on a website page now deleted I have some software which might still get me to it.

Anyone have a location for the list?

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By User deleted
07th Mar 2008 11:17

Intention
Using MLR for tax compliance may not have been the initial intention (honest gov?), but when it comes to cost cutting -i.e. killing two birds with one stone it is quite hard to argue against using existing information.

This is exactly what has just happened with VAT - see New use for Intrastat data

All in a name...
I have been calling myself a tax consultant for years rather than an accountant. I did call myself a tax advisor once when an old school friend asked - she misheard though and thought I said "Taxi driver" so I don't use that one anymore!

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By Nick Graves
06th Mar 2008 18:44

defining " accountant"
Agreed, the extended MLR's an ineffective job creation exercise and clouds the ratings of accountants further.

I suppose changing my job description to "numberwang consultant" might swerve the MLR & offending the ICAEW in one fell swoop!

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By John Savage
06th Mar 2008 16:02

No surprise...
David states "Furthermore using information from MLR compliance operations to inform HMR&C's tax compliance work was certainly not the intention when government put forward HMR&C as the appropriate body to deal with MLR compliance."

However, I would state that with the current Government's insidious and continual movements towards a "Big Brother" state, mostly based on the lies and hyping of this bogus "war on terror", their illegal wars, their ID cards by stealth, their deceit regarding an EU referendum, it would come as no surprise to me that they will now use the MLR compliance operations to start vetting accountants. No surprise at all.

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David Winch
By David Winch
06th Mar 2008 12:32

The MLR 'fit & proper' test

Whoever suggested that the MLR 'fit and proper' test might help identify poorly performing tax agents is getting in a muddle!

The 'fit and proper' test:-
(i) will not be applied to persons / businesses which are accountancy service providers supervised by a professional body
(ii) is not related to competence or knowledge (but relates to past criminal convictions, bankruptcy, etc.), and
(iii) is only applied to 'trust and company service' providers (some of whom may also be accountancy service providers - but many ASPs will not be T&CSPs).

Furthermore using information from MLR compliance operations to inform HMR&C's tax compliance work was certainly not the intention when government put forward HMR&C as the appropriate body to deal with MLR compliance.

David
www.MLROsupport.co.uk

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