Working with agents: Deadline extended
An overview of the current strands of work and links to articles studying each area in detail, plus a link for an email response. On 19 Februrary, HMRC extended the consultation deadline on the proposals to 28 April, effectively ruling them out of consideration for the 2010 Finance Act.
This article summarises the work underway with HMRC's consultation on working with tax agents. There are more detailed articles on key aspects of the consultation, which are linked below to provide an in-depth study of the entire area. Those who wish to respond to the consultation can use the email form provided by HMRC which is linked to this article and at the end of each of the more detailed articles.
First consultation
The first consultation on the subject of working with agents was opened on 22 April 2009 and closed on 7 August 2009. The wide-ranging consultation document considered a very broad range of issues from poor work to deliberate non-compliance, and explored the possible approaches HMRC would take. The consultation stated that it was not intended that at this stage solutions would be offered, but that the scope of any future work might be directed by the responses to the consultation. Registration of agents was considered as one possible approach.
Second consultation - deadline extended
The second consultation states that this is part of on-going work, and HMRC clearly intends to break the work down into manageable parts. The consultation opened at the Pre-Budget Report on 9 December 2009. Following initial responses, HMRC has extended the consultation deadline for the draft legislation to 28 April, meaning that the legislative proposals will not be included in the 2010 Budget as many feared. Responses to the wider document should still be submitted by 3 March. This stage of the work considers three main areas:
- Revised procedures (but no new legislation) on reporting misconduct to professional bodies;
- New legislation (which has now been issued in draft form) to deal with delberate wrongdoing by agents, (for which the consultation deadline has been extended) and
- Processes to deal with high volume agents – those who often deal with large numbers of repayment claims in respect of a specific issue.
Decisions already taken
As a result of responses to the first consultation, and HMRC’s views, there are one or two aspects which have already been decided.
- There is to be no registration scheme for tax agents. HMRC was not convinced that this was the appropriate way to go, and respondents to the first consultation generally held a similar view.
- Although there is no particular benefit in defining a tax agent in law, in order to frame legislation dealing with deliberate wrongdoing, some legislation will be needed to identify those the powers are aimed at. This is included in the new draft legislation.
Where next?
The reporting to professional bodies needs no new powers, nor does the action taken by HMRC to deal with high volume agents, so these can commence as and when HMRC decides. Further legislation will be consulted on regarding civil powers for behaviour that does not constitute deliberate wrongdoing – it is anticipated that this may take up to a further 18 months to develop.
How to respond
In order to respond effectively, you will need to consider the proposals in a little more detail. The articles linked above may be of some assistance, but you may also like to study
- Consultation document issued 9 December 2009
- Draft legislation issued 8 February 2010
You can respond by email – powers.review-of-hmrc@hmrc.gsi.gov.uk
Log your responses on our Any Answers forum and we'll enter you into a prize draw to win a bottle of champagne if we hit 100 responses.
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Working with agents????????????
Working together? I went to one meeting and that was it. It's not working together it's how best to work within the framework we already have. When the basis of the framework is knotted then there is no chance of ever achieving anything. Some might say; hang on what about "this and that" but the alterations are purely common sense or cosmetic.
HMRC (Gordon Brown) does not want to work with; he wants to control.
What about "not working with HMRC" and letting them get on with their flawed condoc so that we can challenge them on every turn. This condoc will go through in the way HMRC want it to, thats the whole point of it. So why are we helping them???????? They knew there would be a barrage against them but it would appear that we have accepted the principal that there should be more controls over Accountants and how we work.
An investigative inspector has the right to enquire into the figures that go to make up the annual return, and challenge them. HMRC do not have the right to say "I do not like the way you are conducting your tax affairs because it reduces your tax bill" and that is what this condoc is all about.
The one thing we tend to forget is that HMRC are supposed to be impartial. That means they should be making sure Accountants are claiming all allowances due. Yer Right!!!!!!!!!!! Yes Mr Brown RIGHT amount of tax means not too much as well as not too little.
Trust
Give HMRC enough rope and it'll hang itself and so on and so forth.
We come down to the simple word trust. HMRC do not trust Accountants and Accountants do not trust HMRC. The later is plain to see for all and is not hidden. However HMRC do not want Accountants to think that they do not trust us and try to hide behind "working together" etc.
The plain truth is that there aren't that many rogue Accountants (does rogue mean Accountants who reduce their clients' tax bill by whatever legal means possible) about to warrent the sort of condoc that is being bandied about so there has to be some other underlying purpose for it.
Gordon Brown's "RIGHT" amount of tax means tax that is payable without tax avoidance measures being applied. Pensions etc are not considered tax avoidance by HMRC.
So what does his "WRONG" in "wrong doing" mean. All frauds and evasions are covered by existing legislation. Only thing left is tax avoidance.
This could be something like paying the wife £5000 or whatever for doing the banking once a week. Legal but "WRONG".
When HMRC are allowed to dictate what is "Right" and "Wrong", which will happen, thats when the human rights act will be really tested.
A licence to print money?
Clause 2 of Sch 1 of the draft bill is so widely drawn that the man in the pub (who may know nothing at all about tax) who advises what you should do in connection with tax is your tax agent (you may have others).
If he advises you to do something that is capable of bringing about a loss of tax he can (under part 3 clause 25) be liable to a penalty of the greater of 100% of the potential lost revenue or £5000.
How many of us have not heard someone in a pub tell us how to avoid - or even evade - tax?
Ah yes! they will say but we won't use the legislation in that way.