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64-8 – to be or not to be?

The new world of Identity Assurance (IDA) has the potential to introduce a new administrative burden on firms and their clients while alleviating another. Steve Checkley explores how a new 64-8 regime mandated under IDA could affect your firm

I've often wondered how HMRC determines the numbering schemes of some of its forms. As a software man (and an accountant at heart), it comes as little surprise to learn that I rather like process, procedure and pattern. While the Self Assessment, Corporation Tax, Payroll and VAT forms all seems to have very logical numbering schemes, some forms seem to have unique number identities of their own.

Forms like the humble 64-8, for instance, which is the subject of this article. I'm sure someone somewhere would be able to tell me how it got its designation and whether forms 1 to 7 and 9 onwards exist today – but the chances are that by the time my curiosity has been quenched, the 64-8 will have been replaced with something rather more formal.

As readers of this magazine will be aware from last issue, I've had the privilege of working with other software developers and an organisation called BASDA (Business Application Software Developers Association) to discuss the forthcoming introduction of Identity Assurance with HM Revenue and Customs and HM Cabinet Office.

There's no doubt that IDA is going to change the way accountants work. As the jigsaw pieces begin to fit into place, it's going to be vital that accountants become aware of the picture that is building up.

It's a matter of delegating trust

One of the key tenets of IDA, is ‘trust’: trust that the individual or business that is transacting with a Government service is who they say they are. Another key tenet of IDA is that this trust can be delegated to another party.

Clients and accountants already have the concept of delegated trust in place. When a client comes to see you, they still retain all responsibility for the correctness of your work and that their affairs are concluded on time. So HMRC are aware of the relationship and can openly discuss pertinent matters with you, the 64-8 is filed. Whilst this is in fact optional, most agents do file 64-8s detailing the services that they perform for the client.

Under IDA, the concept of trust is rather more formal and client/agent relationships need to be cemented on HMRC systems. Thus, for every client that you act for, it is proposed that there must be a 64-8 in place. It would no longer simply provide you an ability to converse with HMRC about your client but would also be your right to file on their behalf. No 64-8, no filing.

As with much of IDA at the moment, certain concepts in the pipeline need to be formalised at Government level. However, the latest thinking is that a new or improved process that identifies the client/agent relationship is needed.

The proposed process is that you, the agent, would initiate contact electronically with HMRC to inform them that you act for your client. HMRC would then, again electronically, contact the client and they would confirm this relationship by either:

• registering for IDA, validating their identity online using one of the Identity Providers in the process; or

• using existing IDA credentials and authenticating the request. HMRC would then hold on file your right to file on the client’s behalf.

The big question is whether this new system will migrate existing 64-8 relationship data held by HMRC or whether a new database will be created from scratch. If it's the former, that's great, because you'll only need to explain and use the process for new clients or clients taking on new services from you. However, if it's the latter, every single client on your books will need to go through this new process in order for you to file returns on their behalf. Clients that have multiple advisors for services, perhaps one for accounts and tax and another for payroll, will find that they have to go through the process twice; once for each advisor.

Some benefit to all of this

Whilst all of this sounds like there would be a phenomenal administrative burden placed on firms, and there would be, there are some possible and definite long-term benefits to this for the wider society.

Firstly, since identity authentications are carried out by third parties, the agent has in effect obtained the best kind of anti-money laundering check they possibly can: one where an identity is validated by a Government-approved third party. Though it may very well put an end to various third party AML identity checking services, the fact that the Post Office, Experian or one of the many other Identity Providers has confirmed your client's identity must surely be the best form of AML evidence. And, through the signing up of multi-national providers such as Verizon, the Government has ex-patriots and foreign clients covered too. Hopefully, the various accounting bodies will recognise this and relax their rules on AML.

Secondly, any citizen or business that is being subjected to identity and repayment fraud (whether they know it or not) could be saved from future consternation by the mandating of a formal, authenticated 64-8. This benefits everyone, as currently bogus agents can file on behalf of anybody with a UTR and claim a refund, whether a 64-8 is in place or not. Adding in the client validation through IDA requires a whole new level of detailed personal data to set up this relationship. Repayment fraud, as we know, happens and costs the UK dearly.

Finally, so called ‘spoof’ sites that front free Government services, such as obtaining E111 cards, tax discs and more recently Self Assessment tax returns, won’t be able to file on an individual’s behalf (and charge for the privilege) without a formal authority being put in place. This should trigger the user’s suspicion and the potential for being duped into using a non-Government website, even if it’s legal, and paying for an otherwise free service is somewhat thwarted by this extra step in the proceedings.

Final word

As mentioned before, some of the key processes behind Identity Assurance are still being determined. In the first quarter of 2014, HM Government will begin to publish the findings of their investigations into business processes under IDA and it’s from this that we can begin to see the impact.

TaxCalc, our colleagues in the industry, BASDA and, separately, the different accountancy bodies have made the pressure that firms would face following a regime change abundantly clear. Whilst a fraud-free utopia is obviously desirable, transitional arrangements are being put forward by the industry to avoid placing firms under administrative strain. Whether these words of caution are heeded by the Government remains to be seen.

IDA is going to become part of some Government services this year. Key IDA services for accountants and their clients are set to launch in 2015.

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk  or email [email protected]  or by phone on 0800-074-2896