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Agent authorisation-can’t be removed by client?

I’ve come across very troubling situation, shocking for me as I’ve worked and gained my experience in practice with high ethics. Accountant submitted SA100 return for ex-client (using figures out of thin air) and received repayment of income tax (client is builder, working under CIS) two years after they’ve parted ways. Client at the time removed agent through his own HMRC online dashboard. Realising what happened, client wrote to HMRC notifying them that fraud has been committed. HMRC responded saying it’s civil matter as they’ve received valid 64-8. Situation now is that it’s only a matter of time before HMRC asks for repayment back as return is wrong and tax claim will not agree with CIS returns filed by client’s contractor. Question - is this really the case and to remove agent individuals have to notify HMRC in writing because simply removing agent online doesn’t do it?

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22nd Mar 2019 21:35

Regardless of whether there was a valid 64-8, I’d say that if an accountant has deliberately filed an incorrect tax return and pocketed the refund it is a criminal and not a civil matter.

And presumably your client will be able to demonstrate that he did not approve the return?

What I don’t quite understand is that if the ex-agent filed the return without, I assume, the client’s knowledge who was dealing with, and what happened to, the ‘real’ return?

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to Wilson Philips
22nd Mar 2019 21:48

That is what I thought but I have copy of the letter from HMRC saying “as return was filed by authorised agent it’s a civil matter”. Yes, there’s no issue with proving client did not approve or even knew it was submitted. And of course it’ll be easy to prove agent pocketed the refund. Original return was overwritten by submitting amended literally day after. Intention to commit fraud is obvious, plenty of evidence and no attempt to hide it.

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to NatashaP
22nd Mar 2019 22:06

I’d suggest that your client speaks to a solicitor and/or police as a matter of urgency.

If and when HMRC try to recover the tax from your client he can simply give them the police case reference.

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to Wilson Philips
22nd Mar 2019 22:16

Thank you, I’ll make that suggestion. I’m so taken back by the whole situation, I’m at a loss.

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to NatashaP
22nd Mar 2019 22:21

You should probably also consider your own obligations under money laundering regulations.

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to Wilson Philips
22nd Mar 2019 22:37

I absolutely intend to do what is right, however unpleasant I find the whole situation. HMRCs attitude here is surprising. If individuals can’t remove agents simply by clicking “delete “ in online account-shouldn’t this be clear, as warning message ? It’s unfortunate I can’t attach screenshot of their response here.

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22nd Mar 2019 23:42

Is it not a matter of fact that an agent has to be able to prove authorisation to file a Return? I will absolutely not file a Return unless I can prove that the client has approved.

Surely, HMRC should be taking that "agent" to task over this?

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to SteLacca
23rd Mar 2019 07:39

I agree. If it is genuine fraud (there’s an oxymoron for you) then I’d be surprised if this is an isolated incident. Which is why it is essential that the authorities are alerted. The problem with online filing is that HMRC have no way of knowing if the return has been approved.

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By Matrix
23rd Mar 2019 07:58

Has the client confirmed that they submitted a paper 64-8? Who submitted the tax return before it was amended? What is your involvement?

Good advice so far and shocking that this could happen.

Also don't believe this is an isolated case, get the press involved, this is a clear loophole which needs to be closed by HMRC.

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23rd Mar 2019 08:07

Assuming that the allegations are true,
a) This is a criminal issue
b) This is a regulatory issue for the regulators of the ex agent
c) This is a regulatory issue for HMRC in the sense that they should be careful about accepting information from the agent

I would recommend that the client contacts their MP and asks their MP to write to Mel Stride about this as well as contacting the police. The advantage of this route is that the minister will sign the letter of response written by the civil servants and might read it. The MP can later ask a written parliamentary question about this (it is sufficiently material as an issue to warrant that)

If their allegations are true then there is a systemic problem in HMRC's procedures.

It is also a civil matter.

It is also, of course, possible that the client is not providing all the information that is needed in order to assess the situation. However, a letter to the minister will get some outcome.

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to johnhemming
23rd Mar 2019 09:35

Apart from any systemic failure, the problem in this case would appear to stem from the fact that someone at HMRC - and they need to be told - doesn't understand what a 64-8 is. They seem to be confusing authority to act with client approval to submit a return. In fact, a 64-8 isn't even an authority to act, or to do anything else on behalf of the client - it's nothing more than an authority for HMRC to communicate with the agent.

So the fact that HMRC may have thought that the accountant was acting as agent for the taxpayer is quite irrelevant.

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23rd Mar 2019 09:21

The fact that removing an agent from your portal doesn’t actually remove them is an issue that should be dealt with by HMRC ASAP (obviously more useful things like MTD will have their priority) and should stop things like this. It’s another case if left hand / right hand (or more like little left finger / left ring finger).

To be fair to HMRC (and I don’t normally like being), given that that’s not the case, why wouldn’t they accept the amended return?

Agree with all the other advice re police, MP, Mel Stride, press etc.

Do the criminal accountants have a regulatory board to complain to?

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By SXGuy
23rd Mar 2019 09:39

Removing an agent from the online portal doesn't remove authorisation. I've had this plenty of times. Regardless of if I remove a client myself I still get letters from hmrc regarding ex clients. This has gone on for years.

With regards to hmrc accepting the agent has authority, hmrc always assume clients have signed the declaration prior to submission and I've had many cases where the inspector just takes it for granted this happend and doesn't even enquire.

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to SXGuy
23rd Mar 2019 14:49

The agents api for authority which is well on its way gives general authority for it and/or vat. I think it is equivalent to a signed authority, but I will check the legal position.

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23rd Mar 2019 10:12

Thank you very much everyone. To update-agents company is overdue with accounts and confirmation statement, compulsory strike off is in action. Case isn’t isolated (others coming forward). Client is Eastern European and wouldn’t know what actually to do otherwise, he thought that HMRC would act and it didn’t happen. Issue I see is ease with which it’s possible to put bank account details for repayment and not being held accountable other than going to the police or to court, which self employed builder sees as a hustle and there’s a risk of not getting anywhere with it and still be liable for those funds fraudulently claimed.

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23rd Mar 2019 11:06

Agree with everyone on here.

Fraud is never a "civil matter".

Get the bobbies involved and cite HMRC as accomplices. They've done nothing to prevent this money laundering beyond say "nothing to do with us, guv".

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