Do you have to register as an agent with HMRC

Do I have to register as an agent with HMRC in order to provide a payroll service

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I am providing a payroll service for a few small employers. Do I need to register as an agent with HMRC as this would then mean registering for AMLS as well?

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RLI
By lionofludesch
10th Jul 2024 15:59

Depends.

If you don't want the hassle, you could get the employer to employ you, I suppose.

Otherwise, you're stuck with all the downsides.

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By Matrix
10th Jul 2024 15:59

What other government gateway would you use? You are not meant to use your clients’ GGs.

The AML info is readily available but applies regardless. https://www.gov.uk/guidance/money-laundering-regulations-accountancy-ser...

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David Winch
By David Winch
10th Jul 2024 16:13

If you are providing payroll services for clients you need to register with HMRC (or one of the other AML supervisory bodies) as an Accountancy Service Provider because you are an 'external accountant' within the definition of Reg 11(c) MLR 2017 and/or a 'tax adviser' within the definition of 11(d).
David

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Replying to davidwinch:
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By FactChecker
10th Jul 2024 17:32

Isn't it time for good old "it depends" to raise its head here?
Specifically with regard to what "providing payroll services" actually encompasses in each case.

If you 'merely' develop & provide Payroll software, then HMRC certainly (used to) accept that this does not make you an 'Accountancy Services Provider' under MLR.
Conversely if you provide a fully outsourced Payroll department (including guidance on policy options to client and support services to client's staff), then they not unnaturally deem you to need registration.

The problem is all the points in between those two extremes ... where you'll find the majority of the 'providers' positioned in a variety of the 'grey areas'.
* We'll process whatever you give us as data input and make sure it's processed correctly in terms of PAYE (but not necessarily that the right people are paid the right amount) = ?
* As previous but we'll also draw your attention to likely omissions/anomalies (for you to decide whether to change input data and re-process) = ?
* As before, but we'll point out missed 'opportunities' (like claiming EA) for you to decide whether to take these on board = ?
* ... I once did a list like this and got to over 40 subtly different variations (all of which I'd encountered in the real world) - ranging through support to advice to bureau to managed services etc.

This might seem an esoteric/pedantic thought ... but in fact it doesn't just apply to Payroll. The same issues (as in lack of clear delineation of what's provided) are now arising more and more within Bookkeeping and even the kind of simple (cash) Accounting on which HMRC is so keen.
And whilst people discuss (or possibly ignore) where to draw the lines, software companies claim to be providing idiot-proof 'solutions' (which is what HMRC want to believe) and so provide less & less support.

No-one actually seems focussed on improving either the quality of services for employers or the accuracy of what ends up being sent on to HMRC!

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Replying to FactChecker:
David Winch
By David Winch
10th Jul 2024 19:54

Hi
I'm going to go all 'text book' here.
According to the CCAB AML guidance "accountancy services" refers to "any service provided under a contract for services (i.e. not under a contract of employment), which requires the recording, review, analysis, calculation or reporting of financial information". So I think we can refer to this when we refer to an "external accountant" (meaning someone subject to MLR 2017).
According to Reg 11(d) MLR 2017 “tax adviser means a firm or sole practitioner who by way of business provides material aid, or assistance or advice, in connection with the tax affairs of other persons, whether provided directly or through a third party, when providing such services".
So it seems to me that if you are a vendor of payroll software (and not inputting data) you are not within MLR 2017.
However if you are advising your client what an employee's net pay is based on being told his gross pay (or hours worked etc) then you are acting both as an external accountant and as a tax adviser (because you are providing material aid or assistance in connection with the tax affairs of someone).
Similarly if you make a record of someone's financial transactions in some sort of organised system, for payment by way of business (so not merely an employee), then you are an external accountant.
You are also an external accountant if you review and analyse someone's financial information (for example acting as a 'fractional' or 'portfolio' CFO) by way of business.
So IMHO it is not necessary that you should, for example, prepare annual accounts or have any contact with HMRC in order to be subject to MLR 2017.
In other words I think the MLR 2017 do apply in all the 'grey areas' you mention.
David

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Replying to davidwinch:
RLI
By lionofludesch
10th Jul 2024 20:18

So not very grey at all, then.

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Replying to davidwinch:
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By FactChecker
10th Jul 2024 21:20

It's a point of view ... but not one with which many, such as the CIPP, would agree with (at least certainly not across the breadth you've indicated).
FWIW that's exactly why I hinted at the immense variety of permutations out there ... and the recognised degree of 'greyness' with which many of them are regarded by professional bodies.

It's a 'discussion' that's been rumbling for many years - not just related to AML but to 'raising professional standards' and all sorts of other movements - and is prone to breaking out into quite vicious language (not here of course).

The current status quo is farcical - consisting broadly of:
* IF you are required for other reasons to be AML registered and then start to offer any type of Payroll services, it is accepted that those Payroll services are covered by your AML obligations;
* IF however you are only in business to provide Payroll services and (historically at least) the majority of those were supply of software, then it is accepted that AML is not required - and there's nobody to enforce it upon you (because you aren't an agent from HMRC's perspective and you don't need a PC or whatever).

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Replying to FactChecker:
David Winch
By David Winch
11th Jul 2024 08:14

Hi FactChecker, I would be interested to see the comments from CIPP to which you refer. The MLR 2017 (including the amendment to the definition of a 'tax adviser' in 2020) are pretty wide-ranging. It is the case that, for example, a person who is not required to hold a practising certificate by his professional body can still be subject to MLR 2017 (and therefore needs to be supervised for AML compliance).
I would add that HMRC seem to be pretty keen on what is sometimes called 'policing the perimeter' - meaning identifying (and penalising) businesses which ought to be registered for AML supervision but are not. So as far as possible I try to give clear and practical answers to AML questions.
David

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Replying to davidwinch:
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By FactChecker
17th Jul 2024 23:13

Hi David, I've been a bit busy in the last week (wedding of youngest and other less exciting activities) ... so put this to one side for when I had more time.

However, I'm not sure that it was worth the wait as on checking various Minutes I've realised (rather obviously with hindsight) that most of the Groups in which I participate operate under Chatham House Rules ... and attendees from PBs are only marginally less sensitive than HMRC managers to the thought of having their comments made public!

However to save myself from too much retyping, I'd direct you to a fairly recent thread on "Raising standards in the tax advice market" ... at https://www.accountingweb.co.uk/any-answers/raising-standards-in-the-tax... ... and my comments therein at:
06th Mar 2024 15:19
06th Mar 2024 15:26
06th Mar 2024 22:57
07th Mar 2024 12:47
07th Mar 2024 14:54
07th Mar 2024 17:07
... with others of course, including some of our best & most incisive members, also making interesting and valid contributions to the thread!

Although the thread is about the broader topic of 'policing' advisers, some of my comments allude to the sensitivity (well actually incredulity) from many senior *Payroll* representatives of professional bodies as to every aspect of what it is hoped to achieve + how it would be operated across such a wide-ranging 'sector' + the likely outcome (of more DiY with greater mistakes - only some of which would be accidental - but almost impossible for HMRC to detect).

I would not expect the necessary bravery of those at the top (whether CIPP or PBs or indeed PWC/E&Y/etc) to put their feelings/beliefs into hard copy, let alone the public domain, but I'm not talking about the odd coffee-chat with junior staff.

There are major (potentially unresolvable) flaws in all proposals on this topic that have been put forward over the last 15 or so years ... usually 'seeded' by someone in Treasury who thinks its a new concept, before they realise what they're up against.

FWIW my perspective in a nutshell?
The rot (which is cultural at heart) emanates *from* HMRC not 3rd-party agents ... and the slow decay brought on by disbanding various Groups (such as Working Together) and calcification of others (SDST) reflects the now dominant belief within HMRC that Agents are the enemy - who at best are to be partially allowed but only under an over-rigorous and inoperable framework of regulation.

A return to more openness + working WITH agents + a willingness to learn and adapt/improve processes ... might just save HMRC.
Whereas their current approach is more than self-damaging and threatens to take the rest of us down to the ocean floor with them.

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By Jenny Holland
10th Jul 2024 16:20

I have been registered as an agent in the past when involved in a partnership but now I am back to being a sole trader I have been told I will need to reregister with new id and agent codes. Does this mean I have to send out for authorisation again from all my clients. HMRC have not been helpful

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Replying to Jenny Holland:
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By SXGuy
10th Jul 2024 18:50

Sounds unlikely unless they revoked your agent ID.

Why don't you try logging in and finding out?

If you hadn't before, you'd need to get a paye agent code at the very least to be able to submit rti.

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By Jenny Holland
10th Jul 2024 21:10

Thanks for all the responses. I am currently using my Partnership ID but am concerned it will be revoked when I am in the middle of a payroll run and my software won't enable RTI submissions. I have been given a new agent code and GG ID, but will I have to get 64-8 authorisations all over again. After being passed around all afternoon by HMRC I couldn't get a clear answer

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Replying to Jenny Holland:
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By Matrix
10th Jul 2024 21:21

You can submit without but obviously will need them for changes in tax codes etc.

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Replying to Jenny Holland:
Pic01
By zxcvb
11th Jul 2024 14:38

Yes, to move a client to your new GG (agent), you will need to re-authorise each one individually. There is no way to simply move them over.
Do it using the facility in the GG rather than paper 64-8s.
Went through the process myself last year.......

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DougScott
By Dougscott
11th Jul 2024 10:21

Whatever Factchecker may say you need to register for MLR as you are clearly not a payroll software provider and are providing payroll services to clients. The penalties for not registering are surprisingly severe. From memory the registration process does ask a lot of questions that may be hard to answer so worth looking at now to see what is required for registration!

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Replying to Dougscott:
David Winch
By David Winch
12th Jul 2024 09:43

I wrote a detailed blog article on HMRC AML late registration penalties at
https://mlrosupport.co.uk/are-hmrc-aml-late-registration-penalties-fair/
David

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