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HMRC digital strategy: An inside view

21st Feb 2014
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HMRC recently invited 25 agents to a presentation in Portsmouth to tell them about its new digital strategy. Jennifer Adams was there and presents her feedback on these new processes.

“Digital by default” is the current theme guiding the future of all government departments, not just HMRC. What this means for the tax department was set out in a December 2012 document entitled HMRC Digital Strategy, which defined the main components of the new approach, what changes are being implemented and when.

There are numerous benefits from digital services including reliability, speed and convenience, but the key reason behind the government’s strategy is cost. Paper costs money to process.

According to HMRC, it handles 80m pieces of paper per year relating to self assessment, and processes 1.3m paper 64-8 authorisation forms, each of which has to be inputted manually by employees who could be better employed in a more cost effective (and more interesting) role.

When the digital plans were announced back in 2012, HMRC recognised that to deliver the strategy it needed to:

  • understand the agent population and the links to clients’ behaviours
  • reduce exposure to cybercrime by bogus agents
  • move agents away from paper towards digital interactions with HMRC
  • enable authorised agents to digitally see and do what their clients can see and do.

The department’s tax agent strategy is progressing along these lines, the speaker explained and the purpose of the Portsmouth meeting was to give accountants, many who run their own practices, more detailed insights into the agents online self serve component of the strategy and to solicit their feedback.

Revised criteria for ‘known’ agents

Readers of the previous article Will your firm pass HMRC’s new test? will know that HMRC is considering using various criteria to test whether an agent will be permitted to use the new digital system to undertake transactions on someone else’s behalf - giving agents the confidence and convenience of “self service”,  while minimising HMRC’s workload.

The exact criteria still await the conclusion of consultations between HMRC and the professions’ representatives. The suggested criteria for VAT registration that upset so many practitioners has been withdrawn, but the other criteria described in the original article are still being considered, including the key money laundering registration requirement.

Most importantly, it was confirmed that should an agent pass the identity assurance (IDA) criteria, they will then get full access to the online agent services. There is no question of there being a system of differing levels of access to particular services for different types of agents. However, there is a proviso that as more services are loaded onto HMRC’s website, access may be considered separately for each service. There will be no complete restriction and the only time access will be fully restricted is in the event of an agent being the subject of criminal proceedings.

Identity assurance was described by HMRC at the meeting as “a process for providing individuals with credentials that allow them to prove they are who they claim to be (when online)”.

The problem with IDA centres around the legal requirement for checks to be in place before someone who is not the taxpayer can enter a taxpayer’s file and change personal information. The aim is for the technology to work in a similar way as logging on to a bank account, with an IDA number/code to let an agent log onto the system via an IDA supplier. Various suppliers are being considered including Amazon and the Post Office.  A major sticking point is the question as to how an agent is to be authorised without the use of paper, as  emails may not always reach the correct recipient.

One attendee commented at this point that it is not HMRC’s job to judge whether someone is “good enough” to be an agent. If one person has agreed for another to be their agent, then it is not within HMRC’s remit to refuse that agent permission to be able to use HMRC’s systems.

Pilot scheme progress

The December 2012 document lists target dates including testing a prototype agent registration and authorisation between autumn 2013 and spring 2014. Individual taxpayers are already getting to test their online services, but this is not yet happening for agents as HMRC has put them last on its testing list. The first pilot of many is currently being undertaken in a controlled environment of 1,000 employees (300 from one company and 700 employees from another). It is a privately controlled test which; should it not work for some reason as effectively as HMRC would wish, it will be pulled, revised and retested.

AccountingWEB members should be aware that agents can view clients’ notices of coding online, which is proving to be a very valuable resource. HMRC plans to take this a step further with a pilot under way for car benefits. Many taxpayers assume that their coding is correct year on year and should they be given a company car, they often assume the company will advise HMRC and the code will be correct as amended. HMRC is working towards a different procedure that will link HMRC’s website to the DVLA database so that all that needs to be entered is the car registration number and the date of allocation to the employee. The website will then automatically create a schedule detailing the car benefit, estimated tax liability and generate a revised notice of coding. The company will submit a P11D as usual and should the figures not match, then the company’s figures will be used by default.

Currently only a company is permitted to offset CIS payable on subcontractors pay against CIS suffered by the company via the completion of a section on the EPS. HMRC is looking to extend this facility to let all businesses offset overpaid VAT, for example against a self employed taxpayer’s liability and visa versa. This could be a great help with cashflow for many firms.

What agents can do to plan for the new system

HMRC will not be looking to transfer all clients onto the new system automatically. The original plan was for HMRC to send details of all clients to the individual agents asking them to confirm whether the list was correct. This procedure has now been revised; instead HMRC will be asking agents to “cleanse” their lists first to make it easier for HMRC to transfer all active clients to the new system.

64-8 authority forms still on the rise

If proof was need that some accountants are not convinced by HMRC’s digital strategy,  it comes with the fact that 1.3m 64-8 paper authority forms are submitted every year (a rate equivalent to roughly 5,000 per day) - but only 30,000 are submitted online. Attendees were asked as to how many of their firms still use paper. Out of the 23 accountants at the meeting, 15 admitted they had used paper submissions for a variety of reasons, the main one being that it was too much hassle to chase clients for reference numbers that had probably been thrown away as junk mail.

If you must insist on submitting the authority form by paper, the presenter has compiled a useful help card of hints and tips that will help the HMRC employees to process the forms more quickly. The Card includes the following suggestions:

  • Use the up-to-date authority form 08/11
  • Type don’t write – it makes it clearer for the poor person who is inputting by hand
  • Send signed original
  • Don’t send a covering letter
  • Submit the form on its own – for example, don’t include the SA1 in the same envelope as each form goes to separate departments.

A version of this card has been posted in the Agent Strategy discussion group.

From the presentation and discussion that followed it is clear that HMRC is making steady progress (or ‘agile’ one presentation slide put it). But there are still many obstacles to be overcome.

As the months progress more details will be released both online and at future presentations. Should you be invited to a presentation you should try to attend, for no other reason than to give your view and obtain first-hand insight as to what is happening which will enable you to plan your firm’s response more effectively.

Replies (25)

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By Red Leader
21st Feb 2014 18:09


Is it really the case that less than 3% of authorisations are done online? I nearly always use the online facility.

I'd be interested to hear what other AWeb members' practice is.

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By memyself-eye
21st Feb 2014 19:47

I do too

Online that is  - don't trust HMRC to either have received or process paper authorisations. To be fair the online version works well.....

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By Howard Marks
22nd Feb 2014 07:21

Same here

Cant remember the last time I saw a paper 64-8.

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By thacca
22nd Feb 2014 11:03

64-8 for New Client

I nearly always use a 64-8 for SA & CT with new clients.

The new client is sitting in front of you. It seems to be much more convenient to get them to sign a 64-8 than after they've left request authorisation online and rely on them passing you the authorisation code.


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Jennifer Adams
By Jennifer Adams
22nd Feb 2014 12:50

Spelling and grammatical errors

As Associate Editor I am unable to load articles onto the site - someone else has to do this for me. Unfortunately in so doing various spelling and grammatical errors seem to have crept in.

Just so you know these are not my errors. I have taken this up with the editor and come Monday the errors will be amended.

Re the number of 'non online' submissions of 64-8 authority forms - I too was amazed that paper 64-8's are still being used by so many agents but I assure you that the figures are correct.

Jennifer Adams


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By DMGbus
22nd Feb 2014 20:08

64-8 insisted upon by HMRC

A current annoyance is HMRC's insistence on paper 64-8 forms being required before HMRC will accept address changes from agents for clients who they have on their authorised online clients.

It appears that HMRC have a "let's be awkward" contingent within its workforce.


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By jon_griffey
24th Feb 2014 10:25

Painful process

Online authorisations are a pain although I like the idea of them and wished they would work.  For a single client you can end up applying for codes for VAT, PAYE, SA and CT.  VAT especially is a pain because you often don't know the registration details etc. They may go to different addresses and you rely on clients to forward them on.  In half of cases clients claim not to have received them, so when they expire you end up applying for them again and continually badgering the client for them.

As FBI2's still need to be filed manually, I tend to stick the 64-8 in the same envelope whilst I am at it on the basis that the authorisations may not come through for all services.

If the client has online services themselves I tell them to log into the Gateway an add our firm as agents so I can immediately view their details.  However there is still a requirement to file a 64-8 or request authorisation codes, as if you rely on this then when you call HMRC they will have no record of 64-8 or authorisation codes being used and so you will fail security - even though you can see the client details on the screen.

The whole system is a mess.  I can wait until the self-service comes in.


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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Feb 2014 11:01

Apologies for the mistakes

I'm sorry to readers and Jennifer who were confused by some of the oddities introduced to the text during the editing process. They were all my fault.

Jennifer alerted me to the discrepancies over the weekend and these have been amended. I hope the errors don't detract from the usefulness of the information and insights she brought back from the Portsmouth meeting.

And I will make a point to be more careful to recheck any changes before pushing the big red "publish" button on AccountingWEB.

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By Andrew_hound
24th Feb 2014 11:54

64-8 on line

Having experienced occasional problems when registering initial batch of clients in 2010, I now find that the system seems to work well for the small number of new clients I have had. A problem this morning when registering a new client for CT: failed when I used the company number but passed with the registered office postcode. Suspect to do with leading '0' on company registration number.

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By BigBadWolf
24th Feb 2014 12:16

VAT 64-8

I recently attempted to use the on-line authorisation process for VAT - but 3 separate clients never received the authorisation codes! SO i guess I will be going back to using paper too

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By dmmarler
24th Feb 2014 12:18

who is the agent?

HMRC is still thinking In terms of an agent being a person.  BUT agents trade through partnerships, LLPs, limited companies etc.  It needs to understand that the legal entity of an agent may be corporate.  (There could be all sorts of insurance fun here where the insurance company says that it covers the partnership/company, not the individual, and that the individual was acting on their own account so not insured for a certain matter ....)

Going back to the earlier comment, how is HMRC going to assess "an agent" when it is a legal entity made up of a number of practitioners? 

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By TaxMatters
24th Feb 2014 12:37

D by D

I attended the same presentation in Sheffield and I had a great deal of sympathy for the presenter. She had not for instance, been informed of the pilot project for registering 64/8's over the phone if you are lucky enough to get through to the Manchester call centre. She put a brave face on the whole of the presentation but telling us that the "tools" would be made available to my clients and after that to me was not the news I wanted to hear. In total I saw nothing to make me think HMRC was doing anything but transferring work to us. There was nothing that said it would improve the current state of play. I felt that it was chaos in the planning stage.

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By kevinringer
24th Feb 2014 13:30

I am occasionally asked by an AAM to send a photocopy of a submitted 64-8 to HMRC, usually where there is some complication about agent authorisation. HMRC themselves have told me that they have to see a 64-8, not an authorisation code. 64-8s also have the advantage of being signed at the initial meeting whereas a code takes time to arrive. 64-8s are also helpful for new cases which don’t have a UTR. But I have also used the code system (done about 30 so far this year) and that is now working far better than a few years ago. All this is academic because both will be swept aside by the new Agent Online Self Service AOSS system – though we’ll have to wait until 2015.

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Stephen Quay
By squay
24th Feb 2014 18:23

64-8 and No UTR

I have obtained agent authorisations using the online service for many years for 100% of our clients - until today. I had to complete a paper 64-8! This was on behalf of my son who has a single job with a low income and has just received a code BR for 2014-15.  Clearly an incorrect code but will cost him serious cash flow problems if not corrected. He doesn't have a UTR (and why should he) which is why we cannot apply online. Once I have authority I will complete HMRC's online form "Tell us if you think your tax code is wrong" as this can be completed on behalf of clients but only if you are the registered agent. 

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By mikeyban
25th Feb 2014 08:15

It would appear to me that agents like the paper process ....

Rather than trying to change something that could work.... Why not have a few more staff processing the forms quickly... How much is being spent on this when all it takes is a few more humans...

Why change for change sake?

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By Akkountant
25th Feb 2014 10:16

Online is best, but when nothing happens, revert to paper forms

I agree with jon_griffey - can't wait until the Agent Online Self Service comes in. 

We've just sent off a batch of 10 signed forms for a new partnership, all on paper because nothing online happens until HMRC gives the person a number.  HMRC might not want all of those 10 forms, but we don't want to omit one only to revisit it later.

In the last 2-3 years we have used online authorisation whenever possible, and it's quick when it works, but sometimes it doesn't work:

-  details not accepted (but details are correct, and used elsewhere by HMRC)

-  no authorisation letter received by client

-  new VAT numbers not recognised by HMRC's system until some days later

 so we send in a paper forms.

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By Jimess
25th Feb 2014 13:38

Paper 64-8's for me

The online authorisation process is a farce.  Numerous times HMRC have advised me that codes have been issued and upon checking with the client they have not turned up, or the client has thrown it away thinking it was a piece of junk mail - I always warn the clients the code is coming through & show them a suitably screened out example of what to expect, but it still fails to pass their junk mail scrutiny.  Paper forms are required by HMRC for various reasons and it is really frustrating to go through the online authorisation process only to be told at a later date that you do not have a 64-8 in place because the smug HMRC operator cannot see it on his/her screen. I agree with an earlier posting - the paper 64-8 system worked well until someone started tinkering with it - the online system causes all manner of time wasting and frustration - why change for the sake of it?  

BTW - not sending 64-8's and SA1's in the same envelope and without a covering letter is a new one on me - I always send them together and always attach them to a covering letter and have not had any mishaps yet.  I refuse to pay for additional postage just because HMRC employees want an easy life!  It is bad enough that you cannot send forms for more than one client in the same envelope without having to separate down the contents even further.  It reminds me of when SA was first introduced and agents in my area all got letters from HMRC district offices asking us not to staple return pages together or to include paperclips in the envelopes because it took their processing staff too long to unpick them!  They never did account for the additional time wasted on sending back unaccepted incomplete returns because half the pages and additional information schedules had gone missing during their incoming post process and the additional costs incurred by agents having to replace them. Shameful.


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By johnjenkins
25th Feb 2014 14:51

I'm all for us

taking on all HMRC work (apart from investigations). Then we can't moan that HMRC got it wrong or we can't get phone replies or e-mails etc. Isn't that what Self Assessment is all about. Give us access to all clients details and watch the problems disappear. All this half-baked nonsense about agent digital strategy sounds like a washing powder commercial and really that is all it is.

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By Jimess
26th Feb 2014 12:55


I wouldn't mind doing HMRC's work if  HMRC recognised that we are doing their work and pay us for doing it - i.e in a similar way that Royal Mail pay Postmaster salaries or the LAA pay lawyers.  Life is busy enough and fees hard enough to earn without taking on extra duties for no reward.

Until then I'll just get on with my own workload, thankyou.

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By johnjenkins
26th Feb 2014 15:38


We do the work anyway. Checking this working this out etc.

When you think about it we don't really need HMRC anymore, in fact they hinder the process.

All we need HMRC for is collection and verification. Look what they've done with Moyles on Wheels, just think what they could do with all the manpower not wasted on answering our queries which we shouldn't have if we were doing the job.

We need to lobby for HMVC.

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By gilehotm324
04th Mar 2014 12:04

Digital strategy

I went to this presentation yesterday.

My initial worries are:

1. Making sure clients do not access and change their data base without our knowledge, and that they keep their login details etc secure.

2. We will probably get loads of emails from HMRC advising us that one or more of our client's data bases has been changed but without telling us which ones so we will have to constantly check to see what has changed.

3. As HMRC will abolish direct access via Gateway and replace it by having to go through an IDA supplier, this introduces a third party into the mix ( such as the Post Office or Amazon ) with all the associated problems of service standards, service availability, service security, AND COST.

4.  The HMRC changes will probably produce an explosion in scam emails both to our clients and to agents, which could cause a big headache.

5. Total reliance on the internet, with the associated problems of service unavailability.

6. Possible problems with our PII insurers if problems arise.

7. Spending more time basically doing the HMRC work and not being able to bill it.

We ouselves will be carrying out a full risk assessment nearer the time to ensure we recognise and address all issues!!


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By johnjenkins
04th Mar 2014 14:03

What happens

if we all say no thanks we not signing up to this crap?

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Stephen Quay
By squay
04th Mar 2014 15:02

64-8 and SA1

We attended the Digital Online Services and Agent Strategy Update presentation at Bournemouth yesterday. On the subject of 64-8's and SA1s he told us to staple them together. With a mail room the size of an aircraft hanger, if the forms are not stapled together they will be placed in separate piles and go off to different departments.  The 64-8 will be processed more quickly and because there will be no UTR and SA record the 64-8 will only be assigned against the taxpayer's NI record. When the SA1 is processed later they will not check whether a 64-8 is on file against the NI record so you would have to submit a new 64-8 to obtain SA authority. By stapling them together they will be processed at the same time.

As an update to my earlier post I asked about the box on the 64-8 "If UTR not yet issued yet tick here". No UTR will be generated and authority for tax and NI (not SA) only will be set up. So I did it right as that's what I wanted. Asked when will I know I have authority, the answer was less helpful - I won't know. When I contact HMRC on behalf of the client I will be declined if authority hasn't yet been processed. I know they are processing 5000 64-8's a day but its a shame the system can't generate an auto alert that it's been completed. Perhaps the 64-8 could accommodate a mobile number for a text alert and or email address. Or perhaps these details could be already be included in our agent profile linked to the authority.


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By johnjenkins
04th Mar 2014 15:07

All this

for us to act as agent. I despair.

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By bclewis
15th May 2014 12:36

64-8 has expired on arrival!

We have in the past filled out the 64-8 online, only for the form to arrive with our client (in Ireland) after it has expired, HMRC don't appear to have heard of airmail. So the paper option is the only feasible solution.

The Irish Revenue's online services are far more advanced than HMRC's with much greater functionality which is improving all the time, all agent linkups are completed online with an uploaded signed authorisation form and we can see the client's record and file returns within 2 days.


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