Finance Bill 2012: Tax agent strategy

Rebecca Benneyworth assesses HMRC's summary of responses to the Agent strategy consultation, and finds some evidence that the tax department is actually listening to the profession.

The responses and “Next steps” document produced by HMRC this week presents a picture of engagement at all levels of the profession. This is just what HMRC wanted, and it is clear that although smaller firms worried about the impact of potential regulation of the tax agent community larger firms also had concerns about the practicalities of the proposals.

HMRC has analysed the responses and highlighted next steps under the three broad headings of the consultation. Here is a summary of the issues.

Enrolment

The responses are summarised as “broad support” for the proposals for agents to register with HMRC. Most of the detail highlighted in the response document outlines the concerns of multi-office and larger firms. The views of some AccountingWEB members that enrolment represented the “thin end of the wedge” with regard to agent regulation were not dealt with in detail, but may have been reflected in the detail on the Agent View.

Generally speaking respondents were supportive of the data set suggested, and enrolment on a “roll out basis” to avoid December and January was the most popular option for implementation. Bank details will only be asked for if firms wish to receive client repayments. Confirmation that the tax affairs of enrolling firms are up to date has been dropped, although compliance of enrolled agent firms will be monitored as part of the agent view.

Next steps - HMRC will continue to consult with agents on the best way of rolling out enrolment, particularly with multi-office firms, as enrolment of the firm rather than individual offices or staff members is intended. In late spring 2012 a pilotwill be run with volunteer firms, using data already held by HMRC to make the initial enrolment simpler.

Self serve

Where responses were positive, they welcomed self serve and considered the offering as appropriate, but quite a number of respondents did not consider that self serve was sufficiently attractive to compensate for the proposals under the Agent view, which were likened to regulation of the profession. There was most support for the ability to self-authorise, but many respondents were concerned that the ability to change data on HMRC’s computer system would introduce additional risks and would not be widely used by them.

Next steps - HMRC will begin work with the professional bodies to assemble a range of case study data based on similar implementations around the world, to establish best practice and learn from others’ experience. During 2012 they will also work with volunteer agents on a real time study on the design and testing of new systems. By 2013 it is planned that the initial range of options for self serve, which will include agent self-authorisation and view only access to more client data will have been finalised and staged roll out will commence. More functionality is planned afterwards, but the emphasis is on introducing robust systems steadily, which will build agents’ confidence and improve take up.

Agent view

The proposals for the agent view – regarded by many, including AccountingWEB members, as a worrying development - were less well received and almost all respondents were concerned that the proposals presented risks to the independence of the profession. There was wide support for independent input into any sanctions proposed by HMRC, and a view expressed by members was sufficiently supported to gain mention in the executive summary – that HMRC should improve its own service standards before seeking to regulate tax agents.

The view in the round was that there should be room in the tax agent community for those who are members of professional bodies and those who are qualified by experience.

Next steps - HMRC has decided to proceed more slowly with this aspect of the agent strategy. The first step will be to create a model of what data is held about agents and their clients within HMRC. HMRC would then consult further on how this data set might be interpreted, and working with agent representatives would develop a set of standards based on this data; these standards would be agreed with agent representatives. HMRC will also consult further in 2012 on standards, oversight of the professional community, and independent input into any sanctions proposed by HMRC. Naturally, when this consultation begins, AccountingWEB will be involved and preparing a response on behalf of members.

Summary

Members of AccountingWEB have already started to express their views on the response document. Was it worth being involved? I think the message to HMRC that we are concerned about the agent view got through – the tax authority sees it as an essential component of the new model, but is prepared to work slowly on an appropriate method, agreeing with agent representatives as we go along.

The concession regarding confirming that your tax affairs are up to date is useful – in reality this would have proved impractical for larger firms in any event. Personally, I am relishing the challenge of getting down to the nitty gritty, and hope that some of our members may be among the volunteer firms offering to test new systems and advise HMRC on the best way forward. Inevitably there will be those who do not support the new systems; I hope that HMRC’s enrolment process will have minimal disruption for them, and that sufficient safeguards are introduced into the agent view that they are at least comfortable with the outcomes.