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istock_box-checking_Laurence Dutton

HMRC reinforces standard for agents

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HMRC has strengthened its “standard for agents” by including stricter transparency rules and greater evidence of customer consent following a consultation on improving standards in the repayment agent sector.

24th Jan 2023
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The update to the standard for agents comes as the tax authority has introduced new transparency requirements for agents as a result of the Raising standards in the tax advice market consultation. The aim of the consultation was to crack down on repayment agents, but these steps to tackle this market will also apply to all tax agents. 

Under the new requirements, agents will be required to be more transparent over agreements clients are entering into and to offer a period of at least 14 days in which a client can cancel any agreement. 

Despite HMRC adding further expectations to the standard for agents document, the tax professional bodies have pushed for the standard to go further and for tax agents to be regulated to increase public confidence and ensure the consumer protection regulatory gap is met. 

Stricter transparency

The new transparency requirements in the standard for agents highlights the need for firms to be clear in their marketing and communications. This includes making it clear that they are not acting on behalf of HMRC and that the identity of the agent or firm is clear.   

Tackling another common repayment agents concern, the ‘standard for agents’ requires that clients understand before the terms of engagement how the agent is to be paid for their services and how any tax refunds will reach the client. This added layer of transparency is in response to the high volume agents that take a commission from a refund claim or have used a deed of assignment. 

The standard for agents outlines the requirement for the terms of engagement to be “accurate and do not mislead or conceal material facts”. The paper used the example of using clear and prominent display of the agent’s fees or charging structure.

Another update that reinforces transparency is the expectation for agents to offer a 14-day cooling-off period for clients, so they can cancel any agreement or assignment they’ve entered into. 

The standard for agents also expects agents to agree the terms of engagement in writing and provide details of how the client should contact them. The standard specifically highlighted social media accounts, a PO Box or an email account not linked to the agent – such as an info@ or contact@ firm email address) – as “not sufficient by itself”. 

Clients should also be given on request the details of how they can complain about an agent and the details of how the client can complain to the agent’s professional body. 

A step towards further regulation

The added layer of transparency and customer consent was broadly welcomed by the tax professional bodies, but both the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) highlighted that further steps are needed to regulate tax agents 

Pointing out that the standard doesn’t require agents to have professional indemnity insurance or participate in continuing professional development, ATT’s Senga Prior said: “As long as activities relating to taxation can be undertaken by anyone who chooses to do so and can be undertaken without any kind of effective regulation, there will always be the opportunity for some engaged in those activities to do so with scant regard for customer protection.”

The chair of the ATT technical steering group acknowledged that the new standard will go some way in demonstrating the characteristics HMRC expects from an agent, but for it to be effective she said “HMRC needs the legislative power to enforce any non-compliance”.

CIOT’s John Cullinane added that the changes would be unlikely to affect members of professional bodies as they are already subject to professional conduct in relation to taxation (PCRT). 

“The standard for agents already broadly reflects PCRT as regards revenue protection – now HMRC intends to introduce some consumer protection elements as well. But the standard still won’t go as far as PCRT on areas such as avoiding conflicts of interest and continuous professional development,” noted Cullinane. 

However, the director of public policy for the CIOT raised questions over the enforcement of the standards if the agent doesn’t meet the requirements. 

“It’s not clear that HMRC can ‘derecognise’ agents other than in a tiny handful of cases, nor is there any range of intermediate measures corresponding to what professional bodies do to help members comply with professional rules and begin to sanction them if they don’t.”

He concluded that the best way of meeting the consumer protection regulatory gap is for all advisers to be members of professional bodies and those who behave unacceptably are expelled from a professional body. 

What is the standard for agents?

The standard for agents sets out HMRC’s expectations of tax agents and advisers in dealing with the tax authority. When agents fail to live up to the standards set, HMRC could suspend agent codes to limit agent access to online services for self assessment and corporation tax. In certain circumstances, HMRC can refuse to deal with tax agents. 

The standard was updated to take on board recommendations from the raising standards in tax advice consultation which took steps to tackle the repayment agent market

The need for new transparency requirements for agents was one of the conclusions in the ministerial forward of the consultation. 

“Feedback suggests that some repayment agents are not transparent about their terms and conditions, resulting in customers not fully understanding or being made aware of what they are signing away, or even that they were dealing with a third party and not HMRC,” wrote Treasury minister Victoria Atkins. 

Replies (27)

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By snickersinatwix
24th Jan 2023 09:49

This is great and I do support action against these cowboys. Now when are HMRC going to improve their own standards? Currently registering at disgraceful............

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Replying to snickersinatwix:
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By Catherine Newman
24th Jan 2023 10:19

My sentiments exactly especially when HMRC have hit rock bottom.

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Replying to snickersinatwix:
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By Brightster
24th Jan 2023 14:02

Only disgraceful? HMRC are not even that good.

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Replying to snickersinatwix:
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By Hugo Fair
25th Jan 2023 00:49

Will there be "a 14-day cooling-off period" for any filing submitted to HMRC ... so you can, without penalty, decide you didn't mean to submit those figures after all?

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By johnjenkins
24th Jan 2023 09:58

I had to laugh. Take the plank out of your own eye before you take the splinter out of someone else's.

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By ireallyshouldknowthisbut
24th Jan 2023 09:59

I'm sure the dodgy repayment guys will be shaking in their boots.

I am afraid what they need to do is to check a sample of the claims, and if a % are iffy, check the lot until the sample goes over a threshold which would make the claims hugely uneconomic for the dodgy co's.

Hard graft for HMRC involving skilled humans, but would probably kill the whole sector stone dead inside of 18 months, and those left standing would have to do is properly.

Boring old compliance. It works.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
24th Jan 2023 10:14

If many CIS repayments are more than 20% of turnover then HMRC will investigate the agent dealing with them.

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Replying to johnjenkins:
By ireallyshouldknowthisbut
24th Jan 2023 10:55

its the "its too small to bother with" mentality of HMRC

Yes its a poor return on resources in the short term to be mucking about with £50 here and there, but when there are hundreds of thousands of dodgy claims they need to do more than introduce some easily ignored rules.

This is all about not having enough staff, and not enough decent senior management to spot problems and sort them.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
24th Jan 2023 12:22

Not forgetting you could get to a stage whereby you're spending loads of money for a very limited income. Or you could get to a stage whereby you fall into the "this is easy" mentality and don't bother with the big stuff. Getting the balance right is far too difficult. So the answer is simple. Make our tax system easy to comply with no room to maneuver but allow the freedom of workers to be able to earn to their potential without constant obstacles.
Never ever forget a happy worker is a productive worker.

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Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
28th Jan 2023 11:31

"This is all about not having enough staff, and not enough decent senior management to spot problems and sort them."

I think the problem is more likely to be a Tax System so complex that it is unworkable.

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Replying to Tornado:
Morph
By kevinringer
28th Jan 2023 11:48

... also, instead of focusing on fixing problems, HMRC as steam rollerred on with new regimes such as 30/60-day CGT, and over the last decade has diverted vast resources into the MTD vanity project.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
24th Jan 2023 12:53

"I'm sure the dodgy repayment guys will be shaking in their boots" ... and that's the central deficiency in this approach.
The target 'bad guys' will continue to run rings round HMRC, whilst the rest of us just have more (pointless) compliance burdens.

It's akin to tackling drink-driving not by targeting the offenders, but by random testing of every 100th motorist (too few to worry wrongdoers but far too many for everyone else who is inconvenienced for no purpose).

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By Self-Employed and Happy
24th Jan 2023 10:50

It's really not difficult to solve the Repayment Agent problem, just don't allow refunds to any accounts other than the tax payers themselves, that would add a level of administrative burden to the Repayment Agents that would mean they fail to exist.

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Replying to Self-Employed and Happy:
By ireallyshouldknowthisbut
24th Jan 2023 10:56

Agreed, another simple solution.

This would have some blow back on the CIS claims, but really dealing with client money is such a ball ache, it always surprises me when firms do it.

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Replying to Self-Employed and Happy:
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By Ian McTernan CTA
24th Jan 2023 12:51

One of the issues is that people don't realise many of these claims firms use 'multi year' agreements, so the client thinks it's just that year's repayment claim they get their hands on but unless the client realises and cancels, they will take a chunk out of every year from then on.

I'll have to disagree on only allowing refunds to the tax payers themselves, this could delay refunds for thousands, but I do agree the whole area needs looking at.

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Replying to Ian McTernan CTA:
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By Self-Employed and Happy
24th Jan 2023 13:24

How could it "delay refunds for thousands"?

It would make it quicker as you aren't having to rely on these firms passing on the funds quickly (which they don't seem to do).

If it means some tax payers miss out on refunds because they themselves won't do the claim themselves then so be it, the "problem" would be very very small.

I actually think these types of expense reclaims should in fact be handled by the originating PAYE employer, it would remove an entire "industry" that is not fit for purpose.

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By [email protected]
24th Jan 2023 11:14

There are so many good suggestions here perhaps HMRC could reply as to why they can't take them on board.
I also concur with their staff being subject to the same examination and professional standards

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Replying to [email protected]:
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By johnjenkins
25th Jan 2023 09:08

If we like it HMRC will get rid of it (Agent strategy). If we don't like it HMRC will push on with it (QU for those earning £10k - £85k). So HMRC taking our comments on board ..........................

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By Yossarian
24th Jan 2023 11:22

In other news, King Herod reinforces his child protection policy.

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By 4b4
24th Jan 2023 12:15

Yes, fantastic - on a day when all HMRC services are down (for 2+ hours currently)- 24th January, with VAT Returns and SA Returns to submit - they really are a shower!

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Replying to 4b4:
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By johnjenkins
24th Jan 2023 12:32

I thought it was my internet. Never did I dream that it could be HMRC.

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By rmillaree
24th Jan 2023 14:33

"Under the new requirements, agents will be required to be more transparent over agreements clients are entering into and to offer a period of at least 14 days in which a client can cancel any agreement. "

Lol so what happens to any client that turns up with tax return that needs completing in the next 14 days - can they demand money back if they dont like the tax we have calculated ? safe in the knowledge hmrc "say" they have that right not to go ahead if they dont want to ? or are they not saying that

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By Mr J Andrews
24th Jan 2023 14:46

And who monitors the monitor ?
One really has to read the Policy Paper ''How HMRC Works With Agents'' to try and comprehend the cloud cuckoo land this Govt. Department is flying in. Nothing but short sighted Utopian ideas clearly put together by some Walter Mitty type.
A particular section ''If Agents Do Not Meet The HMRC Standards For Agents'' is somewhat amusing considering the hypocrisy. It reads :-
''..... we will not tolerate poor agent behaviour which causes harm for taxpayers and our staff and has a negative impact on public revenue.........''
Instead of cowtowing to this nonsense perhaps the CIOT and ATT should counter with a document reading :
''......we will not tolerate poor HMRC behaviour which causes distress to ourselves and clients and where the public purse is affected by anyone within HM Govt who is careless in tax administration with their own affairs or those of their customers.......

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Morph
By kevinringer
24th Jan 2023 15:07

"Another update that reinforces transparency is the expectation for agents to offer a 14-day cooling-off period for clients, so they can cancel any agreement or assignment they’ve entered into. "

The cases I am aware of from the media, the taxpayers were unaware the claims company was even acting for them. I don't see how a 14-day cooling off period will help when the taxpayers aren't aware of what has happened in the first place. All this will do is increase the burden on the compliant, whilst those who break the rules continue to do so.

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Replying to kevinringer:
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By johnjenkins
24th Jan 2023 15:50

Kevin, welcome to the age of the scam. This is what you get when technology goes way beyond what the ordinary person can comprehend.

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Pile of Stones
By Beach Accountancy
24th Jan 2023 20:25

Interesting. I have just has a Practice Assurance review from my institute and the 14 day cooling off period was not mentioned. I currently don't have it in my engagement letter / terms of business.

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By SimonP
25th Jan 2023 03:27

I had to laugh when I read this. I have two clients who have just received massive and unexpected tax refunds. Why? Because although they paid their 2021 tax bills as per my calculations, HMRC in their wisdom decided that the tax liabilities for each of these clients was £0.00. NIL. Nada. So HMRC have now refunded what were correct payments. So, once again, muggins has to get on the phone to sort them out, only now I'll have to wait until after 31 january because HMRC don't want us 'agents' calling them unless it's very urgent.

And only 2 weeks ago I had to deal with the utterly stupid letters that clients were receiving advising them that they hadn't filed their 2020-21 tax returns, when clearly they had and the HMRC website confirmed that. Of course by the time HMRC issued their "sorry about that press release", it was too late. In fact, one of my clients received a Penalty Notice as a consequence; something else to be sorted out and cancelled.

All this wastes our (I'm sure that I am not the only one) time and who pays? Just what I need when I am trying to finish off latecomers' tax returns before the end of the month.

I am seriously thinking that perhaps retirement may be the only way out, except I am not a handyman and I hate gardening with a passion. Nor do I play golf. Damn!!

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