HMRC agent services – or some more equal than othersby
Subtle changes in strategy which will affect Agents the length and breadth of the UK were outlined by HMRC last week in its Talking Points session on Agent Services.
As it rolls out Agent Services (formerly AOSS, Agent Online Self-Serve), HMRC will start ‘risk assessing’ Agents, ‘segmenting’ the Agent population, and providing ‘differentiated’ services.
And it all starts with sole practitioners.
What sort of risk are you?
Under the heading of 2016-17 proposed deliverables, come the enhanced online agent authorisation service (OAA), and the Agent ‘subscription process.’ This, essentially, is the gateway to data collection about Agents - and risk assessment checks.
HMRC will increasingly be collecting data on Agents as part and parcel of its Agent verification procedures.
For subscription, read Agent profiling. For 2016-17, the questions to be asked are likely to be ‘very simple’. They ‘may just be’ the name and address of the Agent, together with a record of whether anti-money laundering registration is held. But ‘over time,’ the data required to ‘subscribe’ will be expanded, with additional information, yet to be decided.
Once Agents have ‘subscribed,’ they will be assigned an Agent reference number. This will be necessary before Agents can access HMRC services through their third party software.
HMRC intends to start the process with sole practitioner Agents.
Small isn’t beautiful
Some of the facts and figures HMRC presented back in 2015 hint at HMRC’s concerns. According to HMRC, of the 43,000 paid Agents in the UK, serving 8m clients, 65% of Agents are ‘sole traders’, 55% have fewer than 50 clients, 82% of them ‘employ at least one professionally qualified person’ and 65% operate below the VAT threshold.
To borrow from the poet Burns – to see ourselves as others see us... But if we did, the future might seem a bit dispiriting for small practices. Because HMRC clearly attributes some of the tax gap to poor Agent performance. And looking at these statistics, the small practice sits prominently in its sights.
So small isn’t beautiful (though it frequently is.) It’s become suspect.
Agents in boxes
Going back to the 2015 ICAEW Hardman lecture by Robert Maas and the earlier HMRC webinar on Agent differentiation, we have HMRC’s initial classification strategy.
At this stage, Agents were to be consigned to various boxes: Assured, Good and acceptable, Poor and Unacceptable.
Good guys and bad guys
Good Agents add value. They exercise due diligence, upskill clients, help ensure compliance and aid client growth and prosperity. They engage with HMRC on a professional basis, meet high professional standards of competence and continued professional development.
The bad guys on the other hand, are weak in technical competence, lack due diligence and reasonable care, place the tax take at risk ... and are an unnecessary burden on resources.
They are disengaged with HMRC processes, raise obstacles to good compliance, disrupt and hinder enquiry work. They can be deliberately non compliant and dishonest. At the most extreme end of the spectrum, we have the RTDWs: the ones HMRC ‘Refuse to deal with’.
Hands up which Agents want to consign to that circle in HMRC’s Inferno?
But this time round, the nuance is subtly different. We seem to have moved from carrots for the good guys, to risk assessment profiling before Agents can even access HMRC services through third party software. We are talking about increasing levels of HMRC monitoring and control.
And we are talking about an Agent population which is being segmented by HMRC and a future where ‘Agents will experience differentiated services’.
A brave new world where all Agents are equal – but some are more equal than others?