New rules: How HMRC works with tax agents
During the 2021/22 tax year, more than 800,000 taxpayers claimed tax refunds for work expenses, with the average claim being around £125. It was reported that over 70% of taxpayers used an agent to make the claim on their behalf, instead of claiming directly via HMRC.
People can claim back work expenses for things such as:
- Uniforms and work clothing
- Buying work-related equipment
- Household costs for those who must work from home
- Professional fees, union membership and subscriptions
- Travel (excluding journeys from home to work)
(a full list of claimable work expenses can be found on the HMRC website)
Claiming a tax refund for your clients
Some taxpayers will have their accountant claim tax refunds on their behalf, while others may use a third-party agent. Many third-party agents will claim tax back for their clients but do not provide clients with any tax advice. Some of these agents have been known to charge fees of up to 50% of a client's tax rebate.
HMRC has gotten tons of complaints from customers who used these repayment agents for their income tax claims. Some of these agents weren’t being up front about their terms and conditions, which meant customers ending up not really knowing what they're signing away or that they're actually dealing with a third party instead of HMRC. Because of this, last year, the government unveiled a package of measures to protect customers claiming tax repayments, including:
- Since 15th March 2023, the ability for taxpayers to legally assign their income tax repayment to a third party was removed
- From 2nd August 2023, you must have an agent services account if you are a tax agent and you want to: submit Income Tax or PAYE repayment claims on behalf of others and charge a fee for doing this
- Introducing new transparency requirements for agents in the HMRC Standard for Agents, explore introducing mandatory pre-contractual disclosure forms and strengthening checks on repayment agents
- Working to ensure that customers fully understand and give their consent when making a claim, as well as improving the way they authorise their chosen agent.
What happens if tax agents don’t meet HMRC’s standards
If HMRC thinks the behaviour of a tax agent will cause harm to taxpayers, HMRC staff, or will have a negative impact on public revenue, HMRC will take action. This could involve encouraging agents to improve their behaviour, imposing sanctions, and limiting what agents can do or prevent them from acting for clients altogether. Learn more about how HMRC works with agents.
What software can be used for Self Assessment tax returns?
Bright’s user-friendly, Self Assessment tax software, BTCSoftware, has been designed specifically for accounting, finance and tax professionals who prepare multiple returns. Make tax season simple using our intuitive layout with context-sensitive HMRC guidance notes and pre-submission validation to reduce errors. To learn more about BTCSoftware, check out the Bright website.
Written by Aoibheann Byrne | Bright
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